British luxury fashion house Burberry shares sank on Monday after reporting a significant decline in retail revenue for the first quarter of fiscal year 2025, amidst a challenging global luxury market and internal leadership changes.
Burberry shares were down 10% at the time of writing.
The company’s retail revenue for the 13 weeks ended 29 June 2024 fell by 22% to £458 million, compared to £589 million in the same period last year. Comparable store sales declined by 21%, a stark contrast to the 18% growth seen in the previous year.
The poor performance has led to changes at the top – a familiar story for Burberry as the group grapples with its brand image and target market.
Burberry announced the immediate departure of Chief Executive Officer Jonathan Akeroyd, who will be replaced by Joshua Schulman as the new CEO and Executive Director.
“Burberry announced a change at the top by appointing Joshua Shulman as Chief Executive Officer, who has experience at Kors, Coach and Jimmy Choo. Former boss Jonathan Akeroyd has stepped down with immediate effect,” said Aarin Chiekrie, equity analyst, Hargreaves Lansdown.
“The change comes alongside a first-quarter trading update which makes tough reading for investors. Weaknesses that were already highlighted by the group coming into the financial year have worsened, with first-quarter revenue falling by an eye-watering 20%, ignoring the impact of exchange rates.”
The luxury brand faced headwinds across all key regions, with Asia Pacific experiencing a 23% drop in comparable store sales, the Americas declining by 23%, and EMEIA (Europe, Middle East, India, and Africa) falling by 16%. Only Japan showed positive growth at 6%.
Burberry has struggled with sales since the pandemic. Initially, the travel restrictions associated with COVID-19 and travel spending gave Burberry some breathing room. However, it is now clear there are deep-rooted problems at Burberry and investors acted with their feet and jumped out of the stock on Monday.
Burberry warned that if current trading trends continue, it expects to report an operating loss for the first half of FY25 and full-year operating profit below current consensus. As a precautionary measure, the company has decided to suspend dividend payments for FY25 to maintain a strong balance sheet and invest in long-term growth.
For the full fiscal year 2025, Burberry anticipates wholesale revenue to decline by around 30%, with capital expenditure projected at approximately £150 million. The company also expects a currency headwind of about £55 million to revenue and £20 million to operating profit.