Burberry, the renowned British luxury brand, faced a challenging period as it reported a significant sales decline, leading to the suspension of its dividend and the replacement of its chief executive.
The company disclosed that its revenue plummeted by more than 20 percent in the quarter ending on June 29, attributing the downturn to a reduction in consumer spending on high-end fashion and related products.
Gerry Murphy, Burberry’s chairman, expressed disappointment over the recent earnings, emphasizing that the luxury market’s challenges were more severe than anticipated.
If the downward trend continues, Burberry foresees reporting an operating loss for the first half of the fiscal year and a profit below expectations for the full year, necessitating the pause of its dividend to strengthen its financial position.
Following these developments, Burberry saw a 15 percent decrease in its shares in London early trading on Monday.
The company appointed Joshua Schulman as its new chief executive, replacing Jonathan Akeroyd who departed abruptly. Akeroyd, a seasoned fashion industry executive, had taken the helm at Burberry less than two and a half years ago.
Burberry has been striving to rejuvenate its brand image, aiming to rebalance its product line to offer a broader range of everyday luxury items while highlighting the timeless and classic attributes that define Burberry.
Despite these efforts, analysts at Bernstein pointed out that the brand repositioning had not yielded the desired results, reflecting the broader challenges faced by brands in transition amidst a weakened luxury industry.
Joshua Schulman, 52, brings a wealth of experience to his new role, having previously led global luxury brands such as Michael Kors and Coach. Gerry Murphy commended Schulman’s leadership and track record in building luxury brands and driving profitable growth.
This leadership change at Burberry is part of a broader trend in the luxury industry, with notable departures at other top fashion houses such as Valentino, Balmain, and Gucci within the past year.
