In a first-quarter trading call on Monday, Burberry warned investors of an expected operating loss in the first half of the next fiscal year, according to WWD. The British fashion house reported a 22% drop in retail revenue to £458 million GBP in the previous quarter, with overall sales down by 20%. Comparative retail revenue also fell by 21%, a stark contrast to the 18% increase seen in the same period last year.
Burberry’s chairman, Gerry Murphy, described the results as “disappointing,” and indicated that the brand might face an operating loss in the next three months if the luxury market slowdown continues. Murphy did not provide specific figures for the projected loss.
On Monday, Burberry’s shares dropped 16% to £7.40 GBP after Murphy announced the suspension of dividend payments. While the brand’s price increases under Daniel Lee have alienated some customers, Murphy emphasized a focus on becoming “more familiar to Burberry’s core customers while delivering relevant newness.” A new campaign set to launch in October aims to address these goals.
In response to declining sales, Burberry has overhauled its executive team. Joshua Schulman, formerly of Coach, will replace Jonathan Akeroyd as CEO. “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,” Schulman said.
Additionally, chief financial officer Kate Ferry announced that “a few hundred” employees would be laid off worldwide as part of a cost reevaluation. Murphy stated that these imminent changes will “start to deliver an improvement in our second half, strengthen our competitive position, and underpin long-term growth.”
Stay tuned for more updates on Burberry’s strategic moves and upcoming campaigns.
