Luxury conglomerate Burberry reported first quarter retail revenues of 458 million pounds, down 22 percent at reported rates and 20 percent CER.

The company also separately announced the appointment of Joshua Schulman as new chief executive officer and executive director, replacing Jonathan Akeroyd who is stepping down and leaving the company with immediate effect by mutual agreement with the board.

"Our Q1 FY25 performance is disappointing. We moved quickly with our creative transition in a luxury market that is proving more challenging than expected," said Gerry Murphy, chair of Burberry.

Burberry projects first half operating loss

The company said that the slowdown in trading experienced in the first quarter continued into July. And if this trend continues through the current quarter, Burberry expects to report a first half operating loss and FY25 operating profit to be below current consensus.

The company has also decided to suspend dividend payments in respect of FY25 in order to maintain a strong balance sheet and the company’s capacity to invest in Burberry's long term growth.

“The weakness we highlighted coming into FY25 has deepened and if the current trend persists through our Q2, we expect to report an operating loss for our first half. In light of current trading, we have decided to suspend dividend payments in respect of FY25,” added Murphy.

In FY25, the company expects retail space to be broadly stable, wholesale revenue to decline by around 25 percent in the first half period and decline by around 30 percent for the full year.

Burberry’s key markets impacted by luxury slowdown

The company added that, operating against a backdrop of slowing luxury demand, all key regions were impacted by macroeconomic uncertainty contributing to the sector’s slowdown.

In this context, first quarter comparable store sales fell 21 percent and all regions declined outside of Japan. Asia Pacific decreased 23 percent with Mainland China down 21 percent, South Asia Pacific down 38 percent, South Korea down 26 percent, while Japan increased 6 percent.

Americas decreased 23 percent, driven by declining locals, while EMEIA fell 16 percent with local spend deteriorating versus last quarter.

By product, outerwear and scarves continued to outperform globally. The contribution from space was 1 percent, leading to a 20 percent decline in retail sales at constant exchange rates.

Burberry appoints Joshua Schulman as CEO

The company said in a statement that an American national, Schulman, 52, joins Burberry with a track record of driving transformative growth and value creation as CEO of global luxury, fashion, and retail businesses.

Schulman was previously CEO of American fashion brands Michael Kors from 2021 to 2022 and Coach, where he also served as brand president from 2017 to 2020.

Prior to this, at Neiman Marcus Group, he was president of Bergdorf Goodman for five years. From 2007 to 2012, Schulman was CEO of Jimmy Choo in London. Earlier, he was executive vice president/ worldwide merchandising and sales at Yves Saint Laurent and worldwide director/ women's ready to wear at Gucci.

He will join Burberry on July 17, 2024 and be based at the company's headquarters in London. He will lead the executive committee and report to Murphy and the board of directors.

“Josh has a strong understanding of our brand and shares our ambition to build on Burberry's unique creative heritage. His extensive experience in luxury and fashion will be key to realising Burberry's full potential," said Murphy.