Burberry announced the shock departure of its chief executive today, alongside a profit warning and the cancellation of its dividend amid a global sales slump.
Jonathan Akeroyd is stepping down from the world-famous fashion house, known for its iconic check pattern, “with immediate effect”.
He will be replaced by the American executive Joshua Schulman, who was CEO of Jimmy Choo, the luxury shoe brand between 2007 and 2012.
The top-level overhaul came alongside a trading update that Burberry’s chairman, Gerry Murphy, described as “disappointing”.
He said the "luxury market ... is proving more challenging than expected”, adding:
“We are taking decisive action to rebalance our offer to be more familiar to Burberry's core customers whilst delivering relevant newness.”
In the meantime, it was out of vogue with investors. Burberry’s shares tumbled 85p to 802p, a drop of almost 10% and the biggest drop on the FTSE 100.
Calls for an end to the “tourist tax” via a return to VAT rebates for London tourists have been ringing through fashion houses and boutiques across the capital.
Internationally, high-rolling Chinese consumers can no longer be taken for granted, while a stronger pound is increasingly a major factor for the industry, with Burberry’s Waterloo trench coat costing £1,890.
Chris Beauchamp, chief market analyst at trading platform IG, described the news out of the 170-year old firm as “bombshell announcements”, and “a kitchen sink exercise par excellence”, raising the potential that after today’s shares slump, “most of the bad news is now firmly in the price”.
Much of that will now depend on the new man in charge, who will work “alongside” Daniel Lee, Burberry’s chief creative officer.
Schulman has also been CEO of US fashion brands Michael Kors and Coach and was president of the luxury department store chain Bergdorf Goodman, part of the Neiman Marcus Group. He will be paid £1.2 million a year in basic salary, with a potential bonus of up to 200% of salary and share awards worth up to 162.5% of salary.
He said today: “I am deeply honoured to join Burberry … an extraordinary luxury brand, quintessentially British, equal parts heritage and innovation … Its original purpose to protect people from the weather is more relevant than ever.”
Akeroyd’s departure after just over two years running Burberry added to shockwaves from last week’s sudden departure of Mulberry’s CEO, Thierry Andretta, who ran the brand best known for its handbags for nine years.
Burberry’s retail revenue in the 13 weeks to June 29 fell by over a fifth to £458 million.
It pointed to “a broader everyday luxury offer” and an emphasis on “more of the timeless, classic attributes that Burberry is known for”. From October, that will “include a dedicated outerwear campaign … building on the established resilience of our house icons.”
