It's no secret that companies in the luxury goods sector have had a tough time of late, but Burberry's troubles stem well beyond the industry's general woes.
Regarded as the UK's only global luxury brand, Burberry issued a dreadful and unscheduled trading update this morning in which it also confirmed that chief executive Jonathan Akeroyd has headed for the exit. Mr Akeroyd leaves with immediate effect by "mutual agreement with the board".
In a move that would seem to confirm widespread industry rumours that chairman Gerry Murphy has spent the last few weeks interviewing replacement candidates, Mr Akeroyd's successor has been named as Joshua Schulman. Mr Schulman served as chief executive of US fashion brand Michael Kors from 2021 to 2022, and was brand president at Coach from 2017 to 2020.
READ MORE: Shares in luxury retailer Burberry plunge as chief executive is ousted
The new boss has a lot of work to do to steady the ship at Burberry, which suffered a 21% decline in like-for-like sales during the financial quarter that ended on June 29.
One of the issues that marks Burberry out from its peers is its heavy reliance on Chinese consumers, even when compared to the rest of the industry. Spending in China has been weak this year amid rising unemployment and a troubled housing market.
Burberry's comparable store sales were down by 21% in mainland China during the latest quarter, but all of its other core markets also suffered double-digit declines. This no doubt reflects that steep price increases instigated by Mr Akeroyd in his pursuit to drive the brand further upmarket.
The company is now consulting with staff on roughly 200 redundancies across it global workforce. It won't be pleasant, but Mr Schulman's bigger task will be to re-engage with its core customer base.
He will be handsomely rewarded should he succeed, with a £1.2 million salary plus a potential maximum annual bonus worth £2.4m. There are also long-term performance share awards valued at up to £1.95m, but with the company's stock languishing at lows not seen since 2010 the question is whether Burberry will fall victim to a takeover before a turnaround can be achieved.
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