Companies

Burberry announces new CEO and warns of loss as first quarter sales slump

Jul 15, 2024 United Kingdom

The luxury company has warned of an operating loss in the 1H of the year if the slowdown in the luxury sector continues, after reporting a 21% year-on-year fall in sales in the 1Q and announcing the exit of CEO Jonathan Akeroyd

“Our Q1 FY25 performance is disappointing. We moved quickly with our creative transition in a luxury market that is proving more challenging than expected. The weakness we highlighted coming into FY25 has deepened and if the current trend persists through our Q2, we expect to report an operating loss for our first half”, commented Gerry Murphy, Chair of Burberry.

In the three months to the 29^th of June, Burberry reported a 22% decline, or 20% at constant exchange rates, in retail revenue to 458 million British pounds, on a comparable basis to the same period of last fiscal year. In this period, comparable sales fell by 21% year-on-year.

In the first quarter of this year, sales in Asia Pacific declined by 23%, as compared to the same period of fiscal 2024. Within this bloc, sales declined year-on-year by 21% in Mainland China, 38% in South Asia Pacific, and 26% in South Korea. Only Japan held up, with sales growth of 6%, mainly driven by strong tourist spending, mainly by Chinese and near-shore customers in Asia.

The Americas and EMEIA regions also underperformed in the first three months of the year, mainly due to a deterioration in local consumer spending. Sales in the former were down by 23% and in the latter by 16% compared to the same period last year.

“In light of current trading”, continued Murphy, “we have decided to suspend dividend payments in respect of FY25”. In addition, Burberry will take “decisive action to rebalance our offer to be more familiar to Burberry’s core customers whilst delivering relevant newness”.

More importantly, the British label has announced the departure of CEO Jonathan Akeroyd and welcomed US veteran Joshua Schulman to the helm. He joins the company “with a track record of driving transformative growth and value creation as CEO of global luxury, fashion, and retail businesses”.

He was most recently CEO of Michael Kors (2021-2022) and Coach, where he also served as brand president (2017-2020). Before that, he was President of Bergdorf Goodman for five years and CEO of Jimmy Choo in London from 2007 to 2012. Earlier in his career, he worked at Yves Saint Laurent and Gucci.

“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”, concluded the Chair of Burberry.

Image Credits: cnbc.com

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