Models present creations at the Burberry runway show during London Fashion Week in February. Photo: Reuters
Burberry, Britain’s largest and most identifiable luxury brand, on Monday (July 15) reported falling sales, suspended its dividend and replaced its chief executive, as it grapples with a pullback in spending by consumers on high-end fashion and related goods and its own stalled transformation.
Burberry said revenue fell more than 20% in its latest quarter, which ended June 29.
A downturn in the luxury market was “proving more challenging than expected”, Gerry Murphy, chair of Burberry, said in a statement, calling the company’s recent earnings “disappointing”.
If the decline persists, he added, the company – famous for its trademark camel check pattern on trench coats, handbags and other items – would report an operating loss for the first six months of its fiscal year and a lower-than-expected profit for the full year.
To bolster its balance sheet, Burberry paused its dividend.
Burberry’s shares dropped 16% in London at the close of trading on Monday (July 15).
Read more: Where does Chanel go from here? A fresh point of view may help the fashion house
The company named Joshua Schulman as its new CEO, replacing Jonathan Akeroyd, who is leaving the company immediately.
The abrupt departure of Akeroyd, a fashion industry veteran who was previously chief executive of Versace and Alexander McQueen, came less than two and a half years after he was tapped to reinvent Burberry – after the brand's failed experiment with a largely Italian leadership team.
Since the departure of fashion designer Christopher Bailey in 2017, Burberry has struggled to revitalise its brand, which the company alluded to in the announcement as “rebalancing” its line to include “a broader everyday luxury offer” and to emphasise “more of the timeless, classic attributes that Burberry is known for”.
In the first attempt, under Riccardo Tisci (known for his work at Givenchy), the brand raised prices, united menswear and womenswear, and held fashion shows that looked sort of like performance art in the woods.
But it mostly confused consumers, who were used to Bailey’s softer, more genial take.
In 2022, as one of his first moves as chief executive, Akeroyd brought on Daniel Lee, a British designer who had transformed Bottega Veneta but left that brand under a cloud.
Lee introduced a new brand colour – a particularly bright shade of what might be called “Burberry blue” – employed a host of British superstars including Vanessa Redgrave and football star Raheem Sterling, and even designed a crochet duck hat that was a viral hit, but his work has yet to define a new stage or have any real aesthetic impact.
Indeed, analysts at the research firm Bernstein said the repositioning had “failed”. Given the luxury industry’s weakness, “it is not surprising to see brands in transition – like Burberry — struggle”, they wrote in a note.
Schulman, 52, was previously chief executive of the US fashion brands Michael Kors and Coach.
“Josh is a proven leader with an outstanding record of building global luxury brands and driving profitable growth,” Murphy said in a statement.
He also has more experience than Akeroyd with large brands such as Burberry, which is built in a pyramid structure with luxury on the pinnacle creating desire that filters down to the more accessible offerings at the base.
The shake-up is the latest at the top of the luxury industry.
Read more: Who’s in and who’s out: The latest movements among the big fashion houses
In March, Valentino announced that its creative director, Pierpaolo Piccioli, would depart after more than two decades at the fashion house.
Both the chief executive and chief marketing officer at Balmain left this year.
Last year, Kering, the French luxury goods holding company, announced the departure of Marco Bizzarri, the longtime chief executive of Gucci, its top brand.
It happened amid a sweeping reorganisation that included replacing Alessandro Michele, a designer known for a magpie aesthetic that helped propel the brand to US$10bil (approximately RM46.8bil) in sales, with Sabato De Sarno, a relative minimalist.
Michele has since joined Valentino, in a typical move of fashion musical chairs.
And Givenchy is without a designer, as is Chanel, one of the largest luxury brands in the world.
Burberry is hoping for relative stability. Despite questions about whether Lee would stay on, Murphy, Burberry’s chair, said on a conference call that no creative changes were planned. – The New York Times
