Burberry fires CEO and dividend, warns about profits

British luxury group Burberry on Monday named former Michael Kors boss Joshua Schulman as its new chief executive, while issuing a profit warning and scrapping a dividend for this year.

The downturn in the luxury goods sector hit Burberry hard last year, putting the 168-year-old British brand off track to take its next steps.

The company said weakness in its market had deepened, causing underlying sales to fall by 21% in the 13 weeks to June 29, and it was therefore looking to re-adjust its offering to make it “more user-friendly” to its “core customers”.

This decline prompted the board to decide to let chief executive Jonathan Akeroyd leave with immediate effect by mutual consent on Monday, just two years after taking up the position.

Schulman, his successor, headed U.S. fashion brands Michael Kors and Coach, Burberry said in a statement, also describing him as “a proven leader with an outstanding record of building global luxury brands and driving profitable growth.”

Burberry chief executive Gerry Murphy said the British luxury brand would stick with designer Daniel Lee after the group on Monday named Joshua Schulman as its new chief executive to lead a shake-up.
“Daniel isn’t going anywhere. He’s looking forward to working with Josh,” Murphy told reporters on Monday.

Burberry, Britain’s biggest luxury brand that has made a name for itself among England’s upper crust, said its full-year operating profit would fall short of consensus estimates if current trends continued.

The company is looking to cut costs and its finance director said he could not comment on future job cuts because consultations were ongoing, but that several hundred roles, mostly in British corporates, could be affected.

The company says a return to the classic camel, red and black check pattern, after flirting with bold colours, will see improvements in the second half of the year.

FNW with Reuters