Burberry Shares Slide After No Dividend and Weak Outlook
Shares of Burberry fell more than 7% on Thursday after the luxury fashion group suspended its dividend, issued weaker-than-expected wholesale guidance, and warned of a larger currency headwind for fiscal 2027.
The decline came despite Burberry reporting stronger-than-expected margins and adjusted operating profit for the 52 weeks ending March 28, 2026.
Investors reacted negatively after the company declared no dividend, disappointing analysts who had expected a payout of 9 pence per share according to Citi estimates.
Weak Fiscal 2027 Outlook Pressures Burberry Stock
Burberry forecast first-half fiscal 2027 wholesale growth in the mid-single-digit percentage range, below analyst expectations of around 6%.
The company also warned that currency fluctuations could create an approximately £10 million headwind on revenue and adjusted operating profit. Analysts had previously expected a much smaller impact of around £3 million.
These cautious projections overshadowed the company’s otherwise strong financial recovery and profitability improvements.
Middle East Conflict and Lower Tourism Hit EMEIA Sales
Sales across Europe, the Middle East, India, and Africa (EMEIA) declined 2% during the fourth quarter.
Burberry attributed the weakness to reduced tourist activity and ongoing conflict in the Middle East, which disrupted early signs of recovery across the broader luxury sector.
Despite regional challenges, the company continued to show improving sales momentum globally.
Burberry Margins and Operating Profit Beat Expectations
Burberry reported a full-year gross margin of 67.9%, significantly above Citi’s consensus estimate of 65.1%.
Adjusted operating profit surged to £160 million from just £26 million a year earlier, representing a 528% increase at reported exchange rates.
Adjusted operating margin also improved sharply to 6.6%, compared to 1.0% in fiscal 2025.
Second-half adjusted EBIT reached £141 million, beating analyst expectations of £135 million. The adjusted operating margin for the second half stood at 10.1%, ahead of the 9.7% consensus estimate.
Analysts at Citi described the results as “all boxes ticked,” highlighting improved full-price sales performance and stronger execution as key positives for the luxury brand.
Comparable Store Sales Continue Improving
Burberry recorded fourth-quarter comparable store sales growth of 5%, matching analyst expectations and marking the fifth consecutive quarter of accelerating sales growth.
Greater China and the Americas both delivered strong comparable sales growth of 10% during the quarter, while Asia Pacific recorded a 3% increase.
For the full fiscal year, comparable store sales rose 2%, recovering from a sharp 12% decline in fiscal 2025.
Burberry Returns to Profitability
On a reported basis, Burberry returned to operating profitability with £115 million in operating profit compared to a £3 million loss the previous year.
Attributable profit reached £21 million, reversing a £75 million loss recorded in fiscal 2025.
Adjusted diluted earnings per share came in at 15.2 pence compared to a loss of 14.8 pence a year earlier.
Revenue and Wholesale Performance
Full-year revenue totaled £2.42 billion, slightly down 2% year-on-year at reported exchange rates and flat on a constant currency basis.
Retail revenue reached £2.06 billion, while licensing revenue came in at £61 million.
Second-half wholesale revenue increased 3%, outperforming Citi’s expectation of 2% growth. However, full-year wholesale revenue declined to £303 million from £319 million the previous year.
Free Cash Flow and Debt Position Improve
Burberry also reported significant improvements in cash flow and leverage metrics.
Free cash flow increased 120% to £141 million from £65 million last year.
Net debt to adjusted EBITDA improved to 1.6 times from 2.3 times previously.
Cash holdings, excluding overdrafts, stood at £614 million, while borrowings declined to £511 million following repayment of a £300 million sustainability bond in September 2025.
Restructuring Costs and Leadership Changes
The company recorded restructuring costs of £45 million during the fiscal year, up from £29 million previously.
Burberry expects cumulative restructuring program costs to reach approximately £80 million, with an additional £5 million restructuring charge anticipated during fiscal 2027.
Looking ahead, the company plans capital expenditure of approximately £120 million for fiscal 2027.
Burberry also announced that Chairman Gerry Murphy will retire following the company’s interim results in November 2026. He will be succeeded by William Jackson.
