Luxury Giant Burberry Suspends Dividend and Appoints New CEO as Shares Drop Sharply

By Thea Felicity

Jul 15, 2024 09:30 AM EDT

Luxury Giant Burberry Suspends Dividend and Appoints New CEO as Shares Drop Sharply — (Photo : Hollie Adams/Getty Images)

Luxury handbags displayed in a Burberry shop window on Regent Street on April 22, 2022 in London, England. The country's Office of National Statistics reported today that retail sales dropped 1.4% in March as the UK's rising cost of living affected consumer spending.

Burberry announced leadership changes on Monday, July 15, and a profit warning, causing its stock price to decline sharply. This shake-up comes as ongoing challenges are observed, following a downturn in comparable store sales, which fell 21% over the past twelve weeks, amounting to retail revenues of £458 million ($594 million).

CNBC reported that shares plummeted by over 15% in early trading following disappointing first-quarter results, prompting the company to forecast an operating loss for the first half of the year and an annual profit below market expectations.

Prior to this, the company suspended its dividend and swiftly appointed Joshua Schulman, formerly associated with Michael Kors and Coach, as its new CEO, with Jonathan Akeroyd stepping down immediately by mutual agreement.

Known for its iconic trench coats and distinctive "Burberry check," the luxury giant has been striving to elevate its brand positioning in recent years. Akeroyd, who assumed leadership in 2021, succeeded Marco Gobbetti.

How is Burberry Doing Financially?

The company attributed its sales decline to weakened luxury demand across key global regions, which was further worsened by economic uncertainties impacting consumer spending in Europe, the U.S., and Asia.

Gerry Murphy, Burberry's Chair, acknowledged the severity of their financial status, describing the current quarter's performance as disappointing and indicating a need for strategic adjustments to restore profitability.

Earlier this month, VCPost reported that part of their adjustments was to lay off hundreds of employees, just after their 500 job cuts in 2020 to save £55 million ($70.5 million).

Analysts are unsure if Burberry's financial outlook will improve, noting recent trading trends indicating ongoing challenges in the fashion sector.

Regardless, the company plans to streamline operations, expand product offerings with more accessible luxury options, and overhaul its branding strategy to better connect with its core customers.