Burberry shares plunged 16pc as the company issued a major profit warning, suspended its dividend and its chief executive stepped down with immediate effect.
Jonathan Akeroyd, who took over at the helm of Burberry in 2022 with the remit of returning the fashion house to its British roots, is to be replaced by American executive Joshua Schulman.
Burberry warned that sales had fallen everywhere except Japan in the first quarter of the year, said it would suffer an operating loss for the first six months and added that annual profits would be worse than expected.
It is the company’s third profit warning in a matter of months, after bosses said that trading was worse than anticipated in November and January.
Shares are trading at their lowest level in 14 years, after falling 65pc in the last 12 months.
Burberry chairman Gerry Murphy said Mr Schulman’s experience in luxury and fashion would be “key to realising Burberry’s full potential”.
Mr Schulman was previously the chief executive of luxury bag brand Coach and shoe designer Jimmy Choo, where he expanded the number of stores from 55 to 140 in 32 countries. He previously spent eight years at Gucci, including five in Paris with Yves Saint Laurent and three years in New York City and Florence as boss of women’s ready-to-wear for the Gucci brand.
The announcement followed months of speculation over the future of Mr Akeroyd at the company as it battled to reverse a slump in sales. Burberry had always maintained that he had the full backing of the board.
Revenues were down 22pc for the three months to June 29.
Burberry said it was taking decisive action to try to stem the decline, including a cost-cutting programme to offset the impact of inflation and changes to its products to focus more on “a broader everyday luxury offer”.
The news caused shares to slump 11pc on Monday morning, coming after months of declines. Burberry has already been among the worst performers on the FTSE 100, putting it at risk of relegation from the blue chip index.
The Telegraph revealed earlier this month that Burberry was preparing to axe swathes of jobs in a bid to prop up falling profits.
It comes amid a wider slowdown in the luxury market. However, Burberry has also been battling to win around customers with its designs as it attempts to go more upmarket, raising questions over management.
Earlier this year, Mr Akeroyd agreed to forgo his annual bonus of up to £2.3m in light of the company’s poor performance, with the company saying it would not be appropriate for him to take the payment.
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