Shares in fashion group Burberry closed yesterday's trading more than 16% lower after the luxury retailer cancelled its dividend for the rest of the year and announced the departure of its chief executive.

In conjunction with a dismal and unscheduled trading update, the company said Jonathan Akeroyd is leaving Burberry with immediate effect “by mutual agreement with the board”. He is being replaced in the top role by former Coach chief executive Joshua Schulman who comes armed with a list of "immediate actions" to reverse the company's falling fortunes.

In what Burberry described as "disappointing" first quarter trading, stores sales in the Americas and Asia Pacific tumbled by 23% while Europe, the Middle East, India and Africa were all down by 16%. Japan was the only market in which sales did not decline.

As a result the company could report an operating loss for the first half, and full-year earnings will be lower than previously expected.

READ MORE: The clock is ticking as new boss seeks to revive Burberry

Mr Akeroyd's departure comes just two years after he was poached form Versace. Under his leadership, Burberry had been attempting to shift further upmarket in the luxury goods sector while restoring the brand's "Britishness" under creative director Daniel Lee.

But attempts to move away from Burberry's signature camel, red and black check print in favour of bold colours like blue were poorly received, while the price increases raised eyebrows. Burberry had traditionally charged an average of £990 for its handbags but the "Knight Bag", Mr Lee's first for Burberry, was priced at £2,490 when it went on sale in September last year.

Luca Solca, an equity analyst at Bernstein, said that “it was apparent that the attempted upmarket repositioning had failed" as Burberry has been forced to heavily discount its products online and elsewhere.

Analyst Aarin Chiekrie of Hargreaves Lansdown said the suspension of dividend payments was a "desperate measure" to preserve cash and fortify the balance sheet "indicating that fortunes aren’t expected to pick up in the near term". Burberry has also confirmed that it is in consultations with "a few hundred" employees about redundancies, predominantly corporate roles in the UK.

"Brand weakness extends beyond China, with Europe and the Americas also seeing double-digit revenue declines," Mr Chiekrie added. "There’s a lot of work to be done to make up for years of underinvestment in the brand."

Chairman Gerry Murphy said the company will be working to improve its online sales with a website revamp, while also focusing on more of the "timeless, classic attributes" for which the brand is known. There will also be unspecified cost cuts across the business.

“We moved quickly with our creative transition in a luxury market that is proving more challenging than expected,” Mr Murphy said. “If the current trend persists through our Q2, we expect to report an operating loss for our first half.”

READ MORE: Retail sales falter as Scots shun shopping for major events

He added: “We expect the actions we are taking, including cost savings, to start to deliver an improvement in our second half and to strengthen our competitive position and underpin long-term growth.”

A US national, Mr Schulman will officially join Burberry on Wednesday and be based at the company's headquarters in London. 

"Burberry is an extraordinary luxury brand, quintessentially British, equal parts heritage and innovation," he said. "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."

Shares in Burberry closed 142.6p lower yesterday at 744p. The stock has last nearly half its value so far in 2024 and is down by nearly two-thirds over the past 12 months.