Burberry has announced the immediate departure of CEO Jonathan Akeroyd after just over two years in the role, as the luxury fashion company braces for a significant first-half operating loss and halts shareholder dividend payouts.
The decision, described as a mutual agreement with the board, comes as Burberry grapples with a steep decline in sales.
Taking over from Akeroyd is Joshua Schulman, former CEO of Michael Kors, who will officially assume the role of chief executive on July 17.
The unexpected leadership change was disclosed alongside a dire financial outlook, with Burberry cautioning that continued declines in retail sales could lead to a first-half operating loss. In the first quarter ending June 29, the company experienced a staggering 21% drop in same-store sales.
The grim forecast has already affected investor confidence, causing Burberry shares to plummet by more than 11% shortly after the market opened on Monday. The suspension of the dividend further underscores the severity of the situation.
Gerry Murphy, Burberry’s Chairman, expressed disappointment in the company’s performance but assured stakeholders that decisive measures are being implemented to reverse the sales downturn. “Our first-quarter performance is disappointing,” Murphy said.
“We moved quickly with our creative transition in a luxury market that is proving more challenging than expected. The weakness we highlighted coming into 2024-25 has deepened, and if the current trend persists through our second quarter, we expect to report an operating loss for our first half.”
Murphy outlined the company’s strategy to regain its footing, emphasizing a need to realign Burberry’s offerings with the tastes and preferences of its core customers while introducing fresh, relevant products.
“We are taking decisive action to rebalance our offer to be more familiar to Burberry’s core customers whilst delivering relevant newness. We expect the actions we are taking, including cost savings, to start to deliver an improvement in our second half.”
Jonathan Akeroyd, who previously held the top position at Gianni Versace, joined Burberry in April 2022 with a lucrative “golden hello” worth approximately £6 million. His mission was to restore sales to pre-pandemic levels.
However, his tenure faced numerous challenges, including a series of high-level executive departures and a broader downturn in the luxury retail sector exacerbated by a global cost-of-living crisis, The Independent.
The transition in leadership marks a critical juncture for Burberry as it navigates a turbulent market environment. Joshua Schulman, renowned for his leadership at Michael Kors, is expected to bring fresh perspective and experience to steer Burberry through these challenging times.
The company remains hopeful that its strategic initiatives and new leadership will foster a turnaround and restore investor confidence.