Burberry replaces CEO, suspends dividend payments; shares fall 15%
Pedestrians walk past a Burberry Group Plc store, left, in Hong Kong’s Causeway Bay shopping district.
Xaume Olleros | Bloomberg | Getty Images
Stocks in Burberry fell more than 15% in early trading Monday after disappointing first-quarter results prompted the company to issue a profit warning, replace its CEO and cut its dividend.
The 168-year-old British luxury giant said if the recent slowdown in business continues, it expects to report an operating loss in the first half of this year and a full-year operating profit below current consensus.
The company has also suspended its dividend and appointed Joshua Schulman — who previously led Michael Kors and Coach — as its new CEO. Jonathan Akeroyd will step down “effective immediately by mutual agreement with the Board of Directors,” the company added.
Shares were down 15.2% as of 9:06 a.m. London time.
“The weakness we highlighted as we entered FY2025 has deepened and if current trends continue in Q2, we expect to report an operating loss in the first half of the year,” Burberry chairman Gerry Murphy said in a trading update, describing the company’s first-quarter performance as “disappointing”.
“Based on the current trading environment, we have decided to suspend our dividend payment for FY25… We expect the actions we are taking, including cost savings, to begin delivering improvement in the second half of the year and strengthen our competitive position and support long-term growth.”
Burberry said comparable store sales fell 21% in the 12 weeks to June 29, with retail sales reaching £458m in the period. On a regional basis, sales fell 16% in EMEIA (Europe, Middle East, India and Africa) and 23% in both Asia-Pacific and the Americas.
The company is grappling with slowing luxury demand across major markets, a cost-of-living crisis affecting European and US customers, and economic concerns affecting Asian consumers.
“We are operating in a context of slowing luxury demand as all key regions are affected by macroeconomic uncertainty and contributing to the industry slowdown,” Burberry added.
Stating a desire to “reconnect with its core customer base,” the company said it plans to focus on rebalancing its product offering “to include more everyday luxury,” refining its brand communications, refreshing its website and delivering cost savings.
Known for its trench coats, handbags and “Burberry plaid”, the company has been trying to take its brand to a more upscale level for years.
Akeroyd, who previously worked at Versace and Alexander McQueen, took on the challenge in 2021, taking over from predecessor Marco Gobbetti, who launched a five-year transformation plan in 2017.
