Burberry shares fall over 16% after CEO change and profit warning

At the market open today, Burberry shares plunged 16% on the back of a weak first-quarter performance, a downturn that prompted the luxury fashion brand to replace its CEO and stop paying dividends to shareholders.

Former CEO Jonathan Akeroyd, who served the luxury brand in an executive role for just over two years, has resigned from Burberry “effective immediately” as the luxury brand, by mutual agreement with the board, appoints Joshua Schulman, the former CEO of Michael Kors and Coach, as its new CEO. According to Burberry, he will take up the position on July 17.

In a trading update, Burberry chairman Gerry Murphy called the company’s first-quarter performance “disappointing”. He said: “The weakness we highlighted at the start of fiscal 2025 has intensified and if the current trend continues in the second quarter, we expect an operating loss for the first half of the year.”

In a big surprise, Burberry announced that it could post a loss for the first half of the year if retail sales continue to decline at the current rate. In the quarter ended June 29, sales at stores that had been open for at least a year fell 21 percent.

The company announced that annual profit would be lower than expected and decided to suspend dividend payments. As a result, shares had fallen by over 16% by 1:13 p.m. London time.

Murphy said: “Our first quarter performance is disappointing. We have moved quickly through our creative transition in a luxury market that is proving more difficult than expected.”

“We are taking decisive action to re-orient our offering to make it more familiar to Burberry’s core customers while offering relevant newness,” he continued. “We expect the actions we are taking, including cost savings, to deliver improvement in the second half of the year.”

New CEO Schulman will take up his new role with a Recruitment Share Award worth £3.6 million, dependent on meeting performance targets over three years, and relocation expenses to facilitate his move from New York to Burberry’s London headquarters.

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

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

“I look forward to working with 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 said Akeroyd would not be entitled to a bonus this financial year and that all of his unvested share awards would be forfeited.