Burberry has today reported a smaller than expected 4% drop in quarterly comparable store sales, helped by a stronger Christmas season in the US, an encouraging step in the British luxury brand's turnaround efforts.
Burberry shares jumped more than 14% as investors welcomed the sign of improving demand, adding to hopes that luxury shoppers' confidence is returning.
Shares in luxury conglomerate Kering also gained 8%, while sector leader LVMH was up 3%.
Burberry CEO Joshua Schulman, who took over at the struggling brand six months ago, said its festive advertising, which highlighted its trademark trench coats and scarves more than bags and shoes, resonated with a broad range of customers.
Schulman's strategy is to put the focus on Burberry's best-known products to win back customers he said were alienated by less recognisable designs and higher prices.
"While we recognise we are still early in our transformation, we are encouraged by the response from customers and partners over the festive period," the company said in a statement.
Analysts had expected a 12% decline in comparable sales for Burberry's third quarter, which runs to December 28.
"We view these results as a first (and early) step in the right direction," RBC analysts said in a note.
Analysts at Citi said the strong sales reported by Richemont and Brunello Cucinelli recently could help make investors feel more optimistic about luxury turnaround stories like Burberry.
The Americas was the only region that grew, with sales up 4% in the quarter. Burberry said New York, where the brand opened a refurbished store on 57th Street, performed well.
But every region delivered an improvement from the previous quarter. Asia Pacific sales were down 9% after a 28% decline in the second quarter, while Europe, Middle East, India and Africa (EMEIA) sales were down 2%, against a 10% fall previously.
Outerwear and scarves outperformed globally, Burberry said.
The company said it was now more likely that it would make a profit over its financial year, expecting to offset the adjusted operating loss of £41m it reported in the first half.
