Burberry Group plc

Good morning. I'm Kate Ferry, CFO of Burberry, and with me today is Josh Shulman, our CEO, and Lauren Wu-Leng, Head of Investor Relations. There are slides to accompany this call on our corporate website, and a transcript will also be available later today. In terms of running order, I'll go through our performance in the third quarter, and then Josh and I will be happy to take your questions. Since our last update just a couple of months ago, we have continued to see positive signals across the business, which provide further proof points that the Burberry Forward strategy is working. For the third quarter, comparable retail sales grew 3% versus last year, a sequential improvement on Q2. As planned, we delivered a higher quality of sales across all channels and regions as we returned to a shorter, shallower and more discreet markdown period versus last year. We saw continued brand momentum with the outerwear and festive campaigns, and these were further amplified with activations around the world. We delivered a double-digit improvement in Gen Z customer growth in Greater China and Asia-Pacific, with growth in younger consumers across all regions. Our hero categories continue to outperform, with scarves and outerwear both up double digits, and this momentum is now extending into handbags and ready-to-wear. We've also seen a significant improvement in sell-through, driven by a strong customer response to our Spring 26 collection. In stores, we improved retail productivity and continued the rollout of our scarf bars, reaching 190 to date with 200 on track by year end. Moving on to the quarter's retail performance on slide 3. Comparable store sales grew 3% in the quarter. The impact from space was flat, leading to 3% retail sales growth at constant exchange rates. Currency was a 2% headwind in the quarter, with retail revenue landing at £665 million, up 1% at reported exchange rates. We saw full price sales accelerate this quarter, offsetting reduced markdown activity as we returned to a private sale format in stores and online. The shorter, shallower and more discrete markdown period resulted in a margin improvement overall as anticipated. All four regions delivered flat or positive comparable sales for the second consecutive quarter. Traffic continues to be challenging, but conversion and AUR were up in the quarter, reflecting a strong consumer response to our refreshed ranges. Asia-Pacific led with the greatest sequential improvement, up 5% from flat in Q2, driven by a strong performance in South Korea. South Korea returned to growth at 13%, supported by both local customers and increased tourist spend, particularly from Chinese visitors. Japan grew 2%, in line with Q2, though reduced tourist activity continued to be a headwind. Greater China grew 6%, improving from 3% in Q2, fuelled by local spend. Similar to Q2, Chinese customers outside the region slowed, but local demand offset the decline with the overall cluster turning positive. EMEA was flat year on year, continuing to be impacted by reduced tourist activity. The Middle East, while a smaller part of the business, showed notable strength both locally and across the region. Americas grew 2%, supported by local spend during the festive period and continued growth in new customers. This was slightly below Q2 due to the higher penetration of markdown activity in Q3 last year. We began Q3 with the latest installment of It's Always Burberry Weather, Postcards from London, and followed this with our festive campaign, which drove strong engagement across our channels. Average Instagram reach was up double digits, complemented by a strong performance across digital and social platforms in China. Branded search, i.e. customers looking for Burberry on Google, was up double digits globally. This year, we're excited to celebrate our 170th anniversary with a series of innovative campaigns and activations, starting with the launch of our Gabardine capsule earlier this month. In terms of product, our customers are responding to our timeless British luxury expression and synchronicity between our runway looks and commercial core, enabling us to reach a broad luxury audience. Building on our strength in outerwear, our stronger assortment of knitwear, trousers, skirts and dresses has given customers more ways to wear Burberry head to toe, driving momentum in ready-to-wear. We've strengthened our foundation and accessories, sequentially improving quarter on quarter, led by scarves and bags. Half of scarf purchases were personalised, highlighting our customers' desire for unique pieces anchored in Burberry's brand codes this festive season. In distribution, we continued our focus on enhancing the in-store experience through richer displays and cross-category merchandising. We also delivered a series of high-impact festive activations to engage customers globally, from the spectacular Bloomingdale's Takeover in New York City to an ice skating rink in Beijing, and finally, back home in London with a retail pop-up at the iconic Claridge's Hotel. In addition, our scarf bars continue to outperform and are helping to drive store productivity. Building on this momentum, we're launching more category destinations in the year ahead, including for trench coats and polo shirts. Turning now to the outlook. As we move into the final quarter of the year, the impact of our initiatives continue to build, giving us increased confidence in the direction of the business. We expect adjusted operating profit to be in line with consensus for full year 26. We are confident that we can build on the progress we've made in quality of earnings, continuing to improve performance and driving sustainable long-term value. And with that, we will now be happy to take your questions.

If you would like to ask a question, you may do so by pressing star followed by one on your telephone keypad now. If you would like to withdraw your question, please press star followed by two. When preparing to ask your question, please ensure your phone is unmuted locally to confirm that star followed by one to ask a question. Our first question is from Antoine Belge from BNP Paribas. Please go ahead.

Yes, good morning. It's Antoine Belge at BNP Paribas. So two questions, if I may. The first one is about the very good performance of BNP. Greater China, so could you maybe comment a bit into more detail about the mainland and Hong Kong, et cetera? And so why is it accelerating? Which product are we resonating a bit better with that particular customer group? And my second question is about the retail productivity. I don't know if you can mention figures or at least – some flavor around how it's evolving, especially compared to the more recent period. Thank you very much.