Burberry replaces CEO amid China sales slump

What happened Burberry today announced the departure of CEO Jonathan Akeroyd, who is stepping down immediately, to be replaced by former Michael Kors and Coach executive, Joshua Schulman. The unexpected move comes as the brand suspends its dividend after forecasting a first-half operating loss for 2024. Shares in the British luxury giant plunged 15% this morning in the UK, reflecting investor concerns about the company's short-term profitability and strategic direction. The Jing Take The 168-year-old British luxury brand has seen a significant slump in retail sales, which fell 22% YoY to 458 million British pounds ($594 million) in the first quarter. Burberry said comparable store sales fell 21% in the 12 weeks to June 29, CNBC reports. This decline is attributed to various macroeconomic challenges, including fluctuating consumer demand and increased operational costs. Reported rumours of mass layoffs at the brand came hard and fast last week, before Akeroyd's exit was announced today. It's not just leadership that's been in flux at the brand. Creatively and identity-wise, Burberry has seen grand shifts with the departure of Italian designer Riccardo Tisci. Bottega Veneta-alum Daniel Lee, Tisci’s replacement since late 2022, has revamped the brand with his own visual stamps, style and signatures. Despite early positive signs of approval among Chinese netizens and fashion fans, this has so far not managed to translate into any big sales boosts for Burberry in its biggest and most important market. The brand's product price hikes have also irked others, while the UK's cancellation of tax-free shopping has no doubt also dented income from wealthy tourists on its home turf. The decision to suspend dividends, coupled with a projected operating loss, signals Burberry's cautious approach in an attempt to stabilize its financial fitness. It's a strategy that aims to shore up cash reserves to navigate the uncertain economic landscape more effectively. Could these drastic moves prove telling for more to come within the industry as a whole? Many are struggling to adapt to the new shapes of the global luxury market. As the whole sector grapples with similar issues, Burberry's steps could set a precedent for its peers. Analysts will be closely watching Schulman's initial moves and any strategies he introduces to revitalize the brand's performance and perception. Despite the ongoing challenges for the British fashion giant, the appointment of American Schulman is cause for optimism. Known for his successful tenures at high-profile fashion houses like Coach and Michael Kors, notably both big aggressive players in the affordable luxury space, Schulman is expected to bring fresh energy and innovation to Burberry. This also might be in indicator that Burberry is set to invest in a wider offering in the more aspirational affordable luxury bracket. His expertise in revamping brands could be crucial as Burberry aims to regain its footing in a competitive global market, as well as recapture relevance and fandom in it's crucial China market. The Jing Take reports on a piece of the leading news and presents our editorial team’s analysis of the key implications for the luxury industry. In the recurring column, we analyze everything from product drops and mergers to heated debate sprouting on Chinese social media.

Burberry replaces CEO amid China sales slump

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Published July 15, 2024

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Burberry replaces CEO amid China sales slump