Burberry delivered a Q3 trading update on Wednesday in which it said it “continued to build momentum”. The numbers were generally positive, while not spectacular, but were clearly further evidence of the turnaround continuing.

Looking at the headline numbers, the company said that Retail revenue in the 13 weeks to 27 December increased 1% on a reported basis to £665 million but rose 3% at constant exchange rate rates. Comparable store sales rose 3%, which is good news as they’d fallen 4% in the same period of the previous year.

There were some quite noticeable regional differences with those comp sales in the EMEIA region being flat. But in the Americas they rose 2% while in Greater China they were up 6% and in Asia Pacific 5%.

The company also said that it delivered a “higher quality of revenue” across all channels and regions as it returned to a “shorter, shallower and more discreet markdown period” versus the prior year.

Looking more closely at that regional performance, the company said that Greater China strengthened and doubled its growth compared to the second quarter, driven by local spend.

In Asia Pacific, its acceleration was led by a strong rebound in South Korea with a 13% increase driven by both local demand and Chinese tourist spend. Japan grew, but only by 2%, in line with the second quarter, despite softer tourist activity.

Its growth in the Americas was as a result of new and local customers while the flat result in EMEIA saw locals offsetting declines in tourist spend.

Highlights included the brand seeing double-digit growth in Gen Z customers in greater China and Asia Pacific and continued outperformance of its hero categories, outerwear and scarves, which were both up in double-digits. It has now rolled out 190 scarf balls with 200 on track by the end of its financial year.

But crucially, product momentum is also “now extending to” handbags and ready to wear.

All this was helped by its outerwear and festive campaigns which were further amplified with experiential activations in key regions.

And it says that it’s seeing a strong customer response to Spring 26, driving significant sell-through improvement and building on the momentum of AW 5.

The company continues to expect adjusted operating profit for FY26 to be in line with analyst expectations. 

CEO Joshua Schulman said of all this: “As we move into 170 years of Burberry, these results reaffirm the enduring strength of our iconic brand and give us confidence in the path ahead.”

Analysts stay cautious

But are analysts as confident? Just ahead of the announcement and after interviewing a number of executives in the luxury space, Yanmei Tang, analyst at Third Bridge, suggested that there are still hurdles to overcome.

She said that “our experts remain cautious on Burberry’s outlook, particularly on the sustainability of margins. They say the recent sales uptick looks more like a bottoming out after a weak base rather than clear evidence of a durable turnaround”. 

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Perhaps the ongoing improvement in Q3 might change their minds on that front?

But she also said that the “renewed focus on heritage, led by the check scarf, trench coat and the reintroduction of scarf bars in stores… is logical in the near term but comes with clear limits. There is a saturation point for these iconic products, particularly among high-value clients, who are unlikely to keep buying multiple check pieces indefinitely”.

She believes Burberry “may have room to push prices modestly higher, especially if demand continues to hold” yet cautioned that “pricing power in outerwear appears more limited, with the trench coat already close to an optimal price point”.

Those she spoke to see the “bigger challenge in leather goods. Burberry has struggled to establish a distinctive and scalable handbag business, frequently launching new designs without creating enduring icons. Experts say breaking into higher-margin leather goods is critical for any meaningful margin recovery”.

This latest update’s suggestion that momentum is now reaching its handbags offer and its ready-to-wear holds out a tantalising hope that the meaningful margin recovery might be within reach.

Robyn Duffy, consumer markets senior analyst at RSM UK, certainly thinks that’s the case. She said that in Q3, “even as the business faced much tougher year-on-year comparisons… the brand’s turnaround strategy is on track. Operating profit continues a promising trajectory beating expectations due to better inventory positioning and tighter controls on costs.

“Schulman’s ‘Burberry Forward’ strategy and the refocus on ‘timeless British luxury’ appears to be landing. By re-anchoring the brand around its heritage and core proposition, Burberry is seeing sales in core product lines improve – namely outerwear, and this is now broadening demand across accessories and ready to wear.

“However, risks remain. Tariff threats from the US pushed European luxury stocks to a three-month low earlier this week, underlining the sector’s sensitivity to geopolitical uncertainty.”