Burberry replaced its chief executive and suspended its dividend after a downturn in the luxury industry thwarted the British trench coat maker’s effort to challenge high-end labels such as Chanel and Louis Vuitton.
Jonathan Akeroyd is departing after less than two-and-a-half years at the British company, and will be replaced by Joshua Schulman, a former CEO of Michael Kors, Coach and Jimmy Choo. The share price, which had nearly halved since Akeroyd took charge in April 2022, fell more than 10 per cent in early London trading.
Burberry also suspended its dividend on Monday and said the slowdown in luxury sector sales has persisted into July. It said if the situation continues, it will report a loss for the first six months of the year as well as full-year profit below expectations.
Burberry is rowing back on its plan to target high-end customers after a slowdown for the luxury market, and will now target less wealthy consumers. The company has been trying to reposition itself as a high-end luxury brand but that turnaround has failed to bear fruit.
The fashion house has jumped from one creative director to the next and also switched CEOs in its bid to rejuvenate the brand. The company most recently hired designer Daniel Lee in October 2022, shortly after Akeroyd joined. Akeroyd and Lee’s plan – which fell short – was to remind customers of Burberry’s “Britishness” with a renewed focus on outerwear and rainwear and a new heritage-inspired logo.
Burberry has struggled in the past decade since the departure of Angela Ahrendts, who was credited with reviving the brand. She was replaced by Christopher Bailey in a move that angered investors as he took on a dual role of CEO and chief creative officer.
The Italian Marco Gobbetti was hired to replace Bailey and he laid out a strategy to “elevate” Burberry with plans to push pricing up and focus more on its handbags and leather accessories unit. Gobbetti hired a fellow countryman Riccardo Tisci, who was renowned for his work at Givenchy, but failed to really reignite demand for Burberry.
Chairman Gerry Murphy said Monday the luxury market was proving more challenging than expected.
“We are taking decisive action to rebalance our offer to be more familiar to Burberry’s core customers whilst delivering relevant newness,” he added, of the change of strategy.
Revenue for the 13 weeks ended June 29 fell 22 per cent to £458 million (€544 million). Comparable same-store sales dropped 21 per cent. – Bloomberg
