UK fashion group Burberry has appointed a new boss as it looks to halt a slump in sales. The company said Joshua Schulman, the former boss of US brand Michael Kors, will take over as chief executive. Mr Schulman replaces Jonathan Akeroyd, who is leaving Burberry “with immediate effect by mutual agreement with the board”, the company said.
His departure came as Burberry reported a sharp fall in sales and warned that if current trends continue its profits will be below expectations. It also said it was suspending dividend payments for the current financial year.
Burberry – famed for its distinctive camel, red and black check pattern – said retail revenues fell by 21% in the three months to 29 June.
Chairman Gerry Murphy called the figures “disappointing” with the luxury market “proving more challenging than expected”.
He hinted at a return to more traditional colours and designs by saying the brand was “taking decisive action to rebalance our offer to be more familiar to Burberry’s core customers whilst delivering relevant newness”.
The actions Burberry was taking, including cutting costs, would improve its performance in the second half of the year, Mr Murphy said. Burberry’s sales have been struggling amid a downturn in demand for luxury goods, with trading in China and the Americas seeing some of the biggest falls. In its latest update, Burberry said sales in the Asia Pacific region were down 23% from a year earlier with sales in mainland China falling 21%. Sales in the Americas also dropped by 23%.
In May this year, the company had announced a 40% fall in full-year profits. Burberry is not the only luxury brand to suffer from the downturn. In March, luxury goods company Kering issued a profit warning after it said demand for its Gucci brand had slumped in China. Mr Murphy said he was “pleased” with Mr Schulman’s appointment.
“Josh is a proven leader with an outstanding record of building global luxury brands and driving profitable growth,” he added.
Mr Schulman, who was also head of Jimmy Choo in London between 2007 and 2012, said he was “deeply honoured” to lead Burberry. Burberry is an extraordinary luxury brand, quintessentially British, equal parts heritage and innovation. Shares in Burberry have more than halved over the past year, and they fell a further 11% when trading began on Monday.
Aarin Chiekrie, equity analyst at Hargreaves Lansdown, said the decision to suspend dividend payments was “a desperate measure to preserve cash and fortify the balance sheet, indicating that fortunes aren’t expected to pick up in the near term”. The new boss has a lot of work to do to steady the ship and prove to investors that calmer seas lie ahead,” he added.
Source: BBC
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