Burberry’s shares dropped over 15% on Monday morning following a profit warning, the suspension of its dividend, and the replacement of its CEO. The luxury fashion brand announced that it expects to report an operating loss for the first half of the year and a full-year profit below current estimates due to a significant slowdown in trading.
The company revealed that comparable store sales fell 21% for the 12 weeks ending June 29, with total revenue at £458 million. Sales declined across all major regions, including a 23% drop in Asia Pacific and the Americas. The downturn in performance has been attributed to a decrease in luxury demand amid economic uncertainty and a cost-of-living crisis affecting key markets.
In response to the poor performance, Burberry has appointed Joshua Schulman, former CEO of Michael Kors and Coach, as its new CEO. Jonathan Akeroyd, the outgoing CEO, is stepping down immediately. Burberry Chair Gerry Murphy described Schulman as a leader with a strong track record in building luxury brands and driving growth.
To address the current challenges, Burberry will focus on cost-cutting measures, refreshing its brand communications, and rebalancing its product offerings to appeal to a broader luxury market. The company is aiming to strengthen its position and ensure long-term growth despite the difficult trading environment.
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