Under the sweeping reforms led by CEO Joshua Schulman, British luxury brand Burberry’s revival plan is showing early signs of success. A rebound in demand from the critical Chinese market has helped the company turn a corner after prolonged declines, with core sales metrics posting their first growth in nearly two years and returning to profitability.

According to Burberry’s earnings report released on Thursday, comparable store sales in the second fiscal quarter (ending September) rose 2% year-on-year, surpassing market expectations. This ended a streak of seven consecutive quarters of decline. Meanwhile, adjusted operating profit for the first half reached £19 million (about $25 million), a sharp reversal from a £41 million loss in the same period last year.

The market responded enthusiastically to the positive signal. Sales in regions including China grew 3% in the latest quarter, reversing a 5% drop in the previous quarter and marking the first growth in China in over a year. This performance is seen as strong evidence of recovering spending appetite among Chinese luxury consumers and has boosted Burberry’s stock, which has risen 28% year-to-date.

“We are beginning to see customers return to the brands they love,” CEO Joshua Schulman said in a statement.

**First Quarterly Growth in Two Years: China’s Recovery as Key Driver** Burberry’s latest results signal a potential turning point for the business. The 2% increase in comparable store sales for Q2 not only beat analysts’ average estimate of 1% but, more importantly, broke the brand’s seven-quarter streak of declining sales.

Profitability also exceeded expectations. The first-half adjusted operating profit of £19 million far outpaced the consensus forecast of £12 million. Investor confidence is reflected in the stock’s performance—beyond the 28% year-to-date gain, Burberry rejoined the FTSE 100 index in September after being removed in 2024.

China’s robust recovery was the primary driver of Burberry’s rebound. Sales in regions including China rose 3% in the latest quarter, marking the first comparable sales growth in China in over a year.

This shift suggests Burberry’s refreshed marketing campaigns are reigniting demand among Chinese luxury buyers. Additionally, the earnings report highlighted that outerwear—a signature category—performed “exceptionally well” across all regions, underscoring the strong appeal of its core products.

**New Leadership: Refocusing on Classics and Cost-Cutting** Since taking over as CEO over a year ago, Joshua Schulman has rolled out a series of strategic shifts aimed at revitalizing the brand’s appeal and restoring profitability. His core strategy involves returning Burberry to its roots, refocusing on iconic British heritage products like trench coats and tartan scarves.

This approach contrasts sharply with the previous management’s push into high-end handbags, which failed to resonate widely with consumers. To support the transformation, Schulman has also prioritized optimizing store displays to better showcase core products and drive sales.

Meanwhile, the company has implemented strict cost controls. Earlier this year, Burberry announced plans to cut about 20% of its workforce to streamline operations. The earnings report revealed £37 million in restructuring costs tied to layoffs in the first half.

Citigroup analyst Thomas Chauvet wrote in a post-earnings note:

“All targets have been met, and execution is on track. We view Burberry’s strategic plan as sound. While patience is still required, the potential rewards outweigh the risks.”

As one of the last luxury firms to report quarterly results, Burberry’s data adds to evidence of recovering industry demand. Next, Richemont, the parent company of Cartier, will release its first-half earnings on Friday, offering further insight into sector trends.