Burberry replaces CEO, suspends dividend; shares fall 15%

The company also suspended its dividend and named Joshua Schulman — who previously headed Michael Kors and Coach — as its new CEO. The company added that Jonathan Ackroyd would step down “effective immediately by mutual agreement with the board.”

Shares were down 15.4% at 9:54 a.m. London time.

“The weakness we highlighted as we enter FY25 has deepened and if the current trend continues into the second quarter, we expect to report an operating loss in the first half,” Burberry chairman Gerry Murphy said in a trading update, describing the company’s first-quarter performance as “disappointing.”

“In light of current trading, we have decided to suspend dividend payments in relation to fiscal year 2025… We expect the actions we are taking, including cost reductions, to start to deliver improvement in the second half, strengthening our competitive position and supporting long-term growth.”

Burberry said comparable store sales fell 21% in the 12 weeks to June 29, with retail revenues of £458m during the period. Regionally, sales fell 16% in Europe, the Middle East, India and Africa, and 23% in both Asia Pacific and the Americas.

The results were “incrementally worse than the already lowered guidance (in January) for FY24,” said RBC analysts Biral Dadania and Richard Chamberlain.

“Current trading trends indicate weakening momentum for the Burberry brand, which we need to address as soon as possible so that Burberry can contain any further losses in market share,” they added.

The company is grappling with declining appetite for luxury goods in its key markets, a cost-of-living crisis affecting its European and American customers, and economic concerns gripping Asian consumers.

“We are operating amidst a slowdown in demand for luxury goods with all major regions affected by macroeconomic uncertainty and contributing to the sector slowdown,” Burberry added.

In a bid to “reconnect with our core customer base,” the company said it plans to focus on rebalancing its product offering “to include a broader offering of everyday luxury goods,” improving its brand communications, updating its website, and achieving cost savings.

Known for its trench coats, handbags and Burberry checks, the company has been trying to make its brand more luxurious for several years.

Ackroyd, who previously worked at Versace and Alexander McQueen, took on the challenge in 2021, succeeding his predecessor Marco Gobbetti who launched a five-year transformation plan in 2017.