British luxury brand Burberry is replacing its chief executive following another disappointing quarter in which sales plunged more than 20%.
Jonathan Akeroyd is leaving Burberry with “immediate effect,” the company said in its earnings release Monday, and replacing him with Joshua Schulman, a luxury wear veteran that has held CEO roles at Coach and Michael Kors. Akeroyd had spent just two years in the role.
A global slowdown on spending on luxury goods has also forced Burberry to issue a profit warning, and it scrapped its dividend. The stock slumped 17% in midday trading on the London Stock Exchange.
In a blunt assessment, Burberry chairman Gerry Murphy called the 168-year-old brand’s quarter “disappointing” and the luxury marketplace is “proving more challenging than expected.”
“We are taking decisive action to rebalance our offer to be more familiar to Burberry’s core customers whilst delivering relevant newness,” Murphy wrote. “We expect the actions we are taking, including cost savings, to start to deliver an improvement in our second half and to strengthen our competitive position and underpin long-term growth.”
Burberry, which is best known for its trenches and purses, is going to shift its focus on targeting high-end spenders and offer “broader everyday luxury” items. It also plans to launch a new website in August.
The fashion house has been on a “long losing streak” with sales and profits, and “things seem to be getting worse,” according to Neil Saunders, retail analyst and managing director at GlobalData Retail.
A combination of softer demand for luxury goods and the brand’s direction is the reason to blame, he said.
“There is a sense that Burberry has been on the back foot and that Jonathan Akeroyd’s revitalization plans have largely failed to stop the rot,” Saunders told CNN. “A course correction has been needed for some time and Burberry is hoping a new CEO can deliver this.”
