Burberry Shares Fall Over 16% Following CEO Change and Profit Alert

At today’s market opening, Burberry’s shares tumbled 16% due to a poor first-quarter performance. This downturn prompted the luxury fashion brand to change its CEO and eliminate dividend payouts to shareholders.

Former CEO Jonathan Akeroyd, who served the luxury brand for slightly more than two years in his lead position, has stepped down from Burberry “with immediate effect” as the luxury brand appoints Joshua Schulman, the previous CEO of Michael Kors and Coach, as its new chief executive following a mutual agreement with the Board. He will take this position on July 17, according to Burberry.

In a trading update, Burberry Chair Gerry Murphy characterized the company’s first-quarter performance as “disappointing.” He stated, “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.”

To much surprise, Burberry announced an alert that it might report a loss for the first half of the year if retail sales continue to decline at their current rate. In the quarter that ended on June 29, sales at stores that had been open for at least a year dropped by 21%.

The company announced that full-year earnings would be lower than previously anticipated and decided to suspend its dividend payments. As a result, by 1:13 p.m. London time, shares had dropped over 16%.

Murphy said, “Our first-quarter performance is disappointing. We moved quickly with our creative transition in a luxury market that 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,” he continued. “We expect the actions we are taking, including cost savings, to start to deliver an improvement in our second half.”

The incoming CEO Schulman assumes his new position with a “recruitment share award” valued at £3.6 million, contingent upon meeting performance targets over three years. Additionally, relocation expenses are provided to facilitate his move from New York to Burberry’s London headquarters.

In his new position, Schulman will receive a salary of £1.2 million, along with the possibility of an annual bonus of up to £2.4 million. He is also eligible for the £1.95 million long-term performance share awards.

Schulman said, “Burberry is an extraordinary luxury brand, quintessentially British, equal parts heritage and innovation. Its original purpose to protect people from the weather is more relevant than ever.”

“I look forward to working alongside Daniel Lee and the talented teams to drive global growth, delight our customers, and write the next chapter of the Burberry story,” he added.

Burberry stated that Akeroyd will not be eligible for a bonus this financial year, and all of his unvested share awards will be forfeited entirely.