British fashion label Burberry announced on Monday the immediate departure of CEO Jonathan Akeroyd following underwhelming financial results, impacted by weak demand in China.
Akeroyd, 57, steps down after a tenure of less than two and a half years. He will be succeeded by Joshua Schulman, a seasoned executive with prior leadership roles at American brands Michael Kors and Coach.
In a statement, Burberry chair Gerry Murphy praised Schulman, a 52-year-old US national, as a "proven leader" with a strong track record in building luxury brands and achieving profitable growth. Schulman is set to officially join Burberry on Wednesday. He expressed enthusiasm about collaborating with creative director Daniel Lee and the company's team to foster global expansion and continue the legacy of the 168-year-old brand, known for its iconic trench coats and signature check design.
The announcement came alongside a financial update, where Murphy acknowledged the group's "disappointing" performance. For the first quarter ending in June, Burberry reported a 22 percent drop in revenue, amounting to £458 million ($595 million). This decline prompted the company to implement cost-cutting measures, including the suspension of dividend payments. Murphy cautioned that Burberry might face an operating loss in the first half of the year.
The company's shares reacted sharply, plunging 14.5 percent to £7.57, marking the most significant drop on the FTSE 100 index, which remained stable in morning trading. Richard Hunter, head of markets at Interactive Investor, remarked that Burberry's first-quarter update, released ahead of schedule, brought unexpected developments. He attributed the company's challenges to weakened consumer demand, particularly in China.
Since the beginning of the year, Burberry's share price has fallen 46 percent. This downturn reflects broader struggles in the luxury fashion sector. Gucci's parent company, Kering, issued a profit warning in April, also citing a sluggish Chinese economy.
China recently reported lower-than-expected growth of 4.7 percent in the second quarter, the slowest since early 2023. This slowdown follows the country's emergence from a stringent zero-Covid policy that had stifled economic growth. Additionally, retail sales, a critical indicator of consumer spending, rose only 2 percent in June, down from 3.7 percent in May. According to Chris Beauchamp, chief market analyst at IG, luxury brands like Burberry can no longer rely on Chinese sales as a guaranteed revenue source.
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