15th Jul 2024 09:05
(Alliance News) - Burberry Group PLC on Monday parted ways with its chief executive after just two years on the job, as the British luxury brand suspended dividend payments amid a drop in sales.
Burberry shares dropped 14% to 758.22 pence early Monday in London. The stock is down 64% over the past 12 months amid mounting sales issues.
Burberry said Jonathan Akeroyd is leaving the company immediately "by mutual agreement with the board". He will be replaced as chief executive officer by Joshua Schulman, who was CEO of US fashion brand Michael Kors from 2021 to 2022. Shulman previously was CEO and brand president at handbag maker Coach.
Akeroyd had joined Burberry as CEO only in April 2022. The former head of Italian fashion house Gianni Versace Spa and British peer Alexander McQueen had replaced Marco Gobbetti in the Burberry hot seat.
Akeroyd's sudden departure came as Burberry issued a profit warning for the first half of its financial year and full-year and said it will suspend dividend payments for financial 2025.
Retail revenue for the 13 weeks that ended June 29, Burberry's financial first quarter, was GBP458 million, down 22% from GBP589 million a year before, it said. Revenue was down 20% at constant foreign exchange rates.
Comparable store sales in the same period were down 21% from a year before. By region, the decline was 23% in Asia Pacific, 16% in Europe, Middle East, India & Africa, and 23% in the Americas.
Within Asia-Pacific, comparable store sales were down 21% in China and 26% in South Korea, but up 6% in Japan.
The sales decline hasn't let up, Burberry said.
"The slowdown in trading we experienced in Q1 FY25 continued into July," the company said. "If this trend were to continue through the current quarter, we would expect to report a H1 FY25 operating loss and FY25 operating profit to be below current consensus."
Burberry said it still will pay the final dividend that it declared for financial 2024, which ended on March 30; however, it will suspend dividend payments for financial 2025 "in order to maintain a strong balance sheet and our capacity to invest in Burberry's long term growth".
"We are taking decisive action to rebalance our offer to be more familiar to Burberry's core customers whilst delivering relevant newness," said Chair Gerry Murphy. "
"We expect the actions we are taking, including cost savings, to start to deliver an improvement in our second half and to strengthen our competitive position and underpin long-term growth."
Burberry said it will rebalance its product offering to include "a broader everyday luxury offer and a more complete assortment across key categories". Daniel Lee remains Burberry's design chief amid the change of CEO.
In terms of marketing, Burberry said its brand communication will emphasise "more of the timeless, classic attributes that Burberry is known for". A dedicated outerwear campaign will be launched globally in October.
"Burberry is an extraordinary luxury brand, quintessentially British, equal parts heritage and innovation," said incoming CEO Schulman. "Its original purpose to protect people from the weather is more relevant than ever."
By Tom Waite, Alliance News editor
Comments and questions to [email protected]
Copyright 2024 Alliance News Ltd. All Rights Reserved.
Related Shares:
Burberry