Burberry boss sacked as sales continue to fall

Fashion brand Burberry has changed its boss in a bid to revive itself in the face of falling sales.

The company said Joshua Schulman, former head of US brand Michael Kors, will take over as chief executive, replacing Jonathan Akeroyd who is leaving Burberry “with immediate effect”.

The change in leadership came as Burberry reported a sharp drop in sales as it continued to be hit by a slump in demand for luxury goods, particularly in China.

The company said it was looking to cut jobs and that if current trends continue, its earnings will fall short of expectations.

Burberry – famous for its distinctive camel, red and black check pattern – said retail revenue fell 21% in the three months to 29 June.

Chairman Gerry Murphy called the figures “disappointing”. with the luxury market “proving more challenging than expected”.

Mr Akeroyd had tried to move Burberry further upmarket, but Mr Murphy said the brand was now “taking decisive action to rebalance our offering to become more familiar with Burberry’s core customers while delivering relevant innovation”.

Catherine Shuttleworth, head of marketing agency Savvy, said the drive to move “further into the luxury market has alienated many of their core consumers, who have effectively been priced out of the brand”.

“Burberry has lost some focus on who its customer really is and today’s announcement that they will refocus the brand on everyday luxury will be welcomed,” she added.

Schulman, who was also head of Jimmy Choo in London between 2007 and 2012, becomes Burberry’s fourth chief executive in 10 years. His predecessor, Mr. Akeroyd, had been on the job for two years.

Burberry is suspending dividend payments to shareholders for the current financial year as it looks to save money.

Mr Murphy said the actions being taken, including cost cutting, would improve the company’s performance in the second half of the year.

Earlier this month, reports said hundreds of jobs at the company could be cut.

On Monday, Burberry’s chief financial officer, Kate Ferry, said she could not comment on the job losses as a consultation process was underway, but added that several hundred roles could be at risk, mainly in its fashion division. UK corporations.

Burberry’s sales have struggled amid weaker demand for luxury goods, with trade in China and America seeing some of the biggest declines.

In its latest update, Burberry said sales in the Asia Pacific region were down 23% from a year ago with sales in mainland China down 21%. Sales in America also fell by 23%.

In May of this year, the company announced a 40% drop in full-year profits.

Burberry isn’t the only luxury brand to suffer a slump. In March, luxury goods company Kering issued a profit warning after it said demand for its Gucci brand had fallen in China.

Pauline Brown, former head of luxury group LVMH for North America, said a shift in consumer attitudes in China was particularly affecting sales of mid-range brands.

“We see this happening in every market that moves from an emerging market to a more mature market. Tastes evolve and people’s interest in displaying their wealth changes with it,” she told the BBC World Service.

“Quiet” brands like Hermes and firms aimed at the ultra-wealthy like Chanel or Montclair are likely to weather the downturn better than highly visible brands like Gucci and “aspirational” ones like Coach or Burberry, she said.

Murphy said he was “pleased” with Mr Schulman’s appointment.

“Josh is a proven leader with an outstanding track record of building global luxury brands and driving profitable growth,” he added.

Schulman said he was “deeply honored” to lead Burberry.

“Burberry is an extraordinary luxury brand, quintessentially British, with equal parts heritage and innovation,” he said.

Burberry shares have more than halved over the past year and fell a further 17% on Monday.

“It’s very difficult for luxury brands that depend on aspirational shoppers,” said Susannah Streeter, head of money and markets at Hargreaves Lansdown.

“They are not as insulated as the super-rich from the pressures raised in an era of high interest rates and an uncertain economic climate.

“Chopping and changing collections to attract the attention of hard-to-please fashion editors can confuse customers and there is expected to be a return to the brand’s core principles and traditional focus on elite wear,” Ms Streeter added.