Burberry (LSE: BRBY) shares fell sharply in early trading today (14 May) after the luxury retailer released its 2025/26 full-year results. While the stock has rebounded from last year’s lows, it still remains more than 50% below its post-pandemic peak.
Yet beneath the market’s cautious reaction, I think there are growing signs Burberry’s turnaround strategy may finally be gaining traction. So could this struggling FTSE 100 stock now be worth a closer look?
Strong FY26 recovery
Chief executive Joshua Schulman described FY26 as a “meaningful inflection point” for the luxury retailer. And on looking through the numbers, I think there’s plenty for long-term investors to feel encouraged about.
Comparable store sales returned to growth during the year, with momentum improving steadily quarter-by-quarter. The strongest performance came from Greater China and the Americas, where fourth-quarter sales both rose 10%.
Profitability also rebounded sharply. Adjusted operating profit climbed to £160m from £26m a year earlier, while margins recovered strongly following last year’s inventory reset.
Importantly, the recovery appears to be driven by more than just cost-cutting. Management highlighted stronger demand for core categories such as outerwear and scarves, alongside improving e-commerce growth and customer engagement.
To me, the most encouraging sign is that the business now appears to be rebuilding momentum through stronger full-price demand and improving brand relevance rather than relying purely on promotional activity.
So why are investors still nervous?
In my view, the market’s muted reaction reflects concerns about how durable this recovery really is.
Management struck a notably cautious tone on the outlook for FY27, repeatedly highlighting macroeconomic uncertainty and pressure on consumer confidence. That’s hardly surprising. Luxury demand globally remains uneven, particularly as aspirational shoppers become more selective with discretionary spending.
While Burberry expects revenue growth and margin expansion this year, the guidance itself was relatively modest. Wholesale revenue is only forecast to rise by a mid-single-digit percentage in the first half, while currency movements are expected to create a fresh headwind for both revenue and profit.
In my view, investors were probably hoping for stronger evidence that the turnaround had already reached escape velocity.
So is Burberry finally rediscovering its identity?
For me, the most encouraging aspect of these results is not simply the improving numbers — it’s the growing evidence that the brand reset may actually be working.
Over the past year, management has refocused the business around “timeless British luxury”, with renewed emphasis on core categories such as trench coats, scarves, and outerwear in general. Crucially, that approach now appears to be resonating with consumers.
What stands out to me is that the group no longer appears focused on chasing every luxury trend. Instead, it’s rebuilding around the products and imagery that originally made it globally recognisable.
There are also early signs of traction with younger shoppers, particularly in China, alongside continued strength in e-commerce.
Taken together, this matters because luxury is often one of the first parts of the market to recover when consumer confidence begins to improve. Despite a challenging macroeconomic backdrop, demand here appears to be holding up better than many would have expected.
In my view, that makes the shares one to consider for long-term investors. The turnaround is still in its early stages, but if brand momentum continues to build, today’s weakness could ultimately prove to be an opportunity rather than a warning sign.
