Burberry's entry-level luxury lures new buyers

By Raechel Thankam Job and Helen Reid

Nov 12 (Reuters) - British luxury brand Burberry beat forecasts for second-quarter sales and first-half profit on Thursday, saying its more affordable products had won over younger shoppers in the United States and China.

Shares rose nearly 10%, topping the FTSE 100 index and outperforming the broader sector, which has struggled as war, especially in the Middle East, has limited tourism and driven inflation, squeezing many customers' spending power.

CEO Joshua Schulman said Burberry had won customers by offering a range of prices within each category, including entry-level options.

"Luxury customers around the world, but particularly in China, are experiencing fatigue with exorbitant pricing," CEO Joshua Schulman told journalists.

A cashmere scarf costs £450 ($596), Burberry's famous heritage trench coat £1,900 and a cashmere coat just over £3,200.

Luxury conglomerates like LVMH and Kering reported weaker-than-expected third-quarter sales in October.

While companies across the luxury sector have experienced weak sales in the Europe, Middle East and Africa region, Burberry achieved growth elsewhere.

In the July-September quarter, its sales in the Americas region rose 11%, while Greater China sales increased 5%.

Across all regions, Burberry said wholesale revenue grew 17% at constant exchange rates in the first half and it forecast wholesale revenue to grow between 10% and 12% in the full year 2027.

Comparable retail sales grew 4% for the second quarter ended September 26, better than analysts' expectation of 3% growth.

For Burberry, adjusted operating profit for the first half of fiscal 2027 was £62 million, beating the average analyst estimate of £44 million.

Apart from the focus on pricing, since taking over in mid-2024, Schulman has sought to associate Burberry with a warm image of Britishness by playing on cultural tropes and marketing that involves casting British cinema and TV icons in quirky short films.

Burberry's Christmas season campaign featured a party in a countryside mansion. It starred Pierce Brosnan of James Bond fame and Fiona Shaw of the cult television series "Killing Eve".

($1 = 0.7543 pounds)($1 = 0.7543 pounds)

(Reporting by Raechel Thankam Job in Bengaluru and Helen Reid in London; Editing by Nivedita Bhattacharjee and Barbara Lewis)