On Monday, Burberry named a new CEO — Joshua Schulman, the former leader of Coach, then Michael Kors — after comparable retail sales tumbled 21 percent in its first fiscal quarter.
The British luxury brand’s latest attempt to push upmarket under chief executive Jonathan Akeroyd and creative director Daniel Lee has struggled to gain traction in a slowing, polarised luxury market, prompting chairman Gerry Murphy to bring in new leadership.
While investors responded favourably to the move, it’s unclear how radically or how quickly a new CEO will reignite excitement in the Burberry brand after years of turnaround attempts.
An initial call with Murphy suggested the company will stick with its long-term brand elevation strategy — and current designer — while at the same time taking “decisive action” to rebalance its marketing and products to include more accessible propositions.
BoF breaks down what the shake-up means for Britain’s biggest fashion brand, and the luxury industry at large.
How badly is Burberry’s business doing?
Under its last two CEOs — Marco Gobbetti, then Akeroyd — the brand made progress on its elevation strategy, reducing its exposure to underperforming malls and wholesalers, and redirecting customers to an increasingly luxurious network of retail stores.
But for more than a decade, Burberry’s top-line revenues have been broadly stagnant, despite surging demand for luxury fashion, at first among Chinese Millennials from 2016 to 2019, and then as sales in the US and Europe boomed in the aftermath of 2020′s coronavirus pandemic.
2023 revenue of £2.97 billion ($3.86 billion) was flat year-on-year. But in the past two quarters, Burberry has gone from stagnation to steep decline. Comparable retail sales fell 21 percent year-on-year in the quarter ending June 29, following a 12 percent decline at the start of the year.
“The weakness we highlighted coming into [fiscal year] 2025 has deepened and if the current trend persists through our Q2, we expect to report an operating loss for our first half,” chairman Gerry Murphy said. “In light of current trading, we have decided to suspend dividend payments.”
What went wrong under Jonathan Akeroyd?
When Jonathan Akeroyd joined Burberry in 2021 after highly successful stints at Alexander McQueen and Versace, the executive seemed like a perfect fit for the British brand: Akeroyd is known as a seasoned merchant with a knack for mixing luxurious brand positioning with it deft merchandising across categories and price points. At Versace, Donatella Versace’s glitzy runway vision drove communications while the brand moved into more upscale stores on luxury shopping streets — but continued to sell iconic silk shirts and small handbags for under $1,000 (not to mention entry-price options like $75 boxer shorts and $300 pool slides).
But Akeroyd’s strategy for the company was being implemented at the same time as a post-pandemic luxury wound down, and the company made a few key missteps during the transition from former designer Riccardo Tisci’s bold-faced, streetwear-inflected vision to the first collections by current creative director Daniel Lee.
Burberry’s first collection under Lee appeared to give free reign to the designer’s sensual, textural, pop take on British luxury, helping to quickly update the brand’s image. But Lee’s offering came with eye-popping price tags that alienated aspirational customers.
New ranges of supple leather bags like Shield and Knight were priced at nearly $3,000, limiting their audience, while cool show pieces like duck- and fox-shaped beanies came in at $4,500. Chunky block-heeled loafers or Timberland-inspired nubuck “Trek boots” failed to take off when priced above $1,000, and have since been marked down over 50 percent by Saks and Neiman Marcus.
Burberry has since worked to fill in its offer with more accessible propositions, but many items are still priced too highly to attract a new cohort of clients at a brand whose starting point is the trench coat, and which still lacks real credibility in leather goods and top-end runway fashion.
Burberry also chose to grant Lee broad authority over the brand’s marketing and communications when he was brought on as “chief creative officer” (a holdover in the company’s structure from the days when Christopher Bailey was simultaneously piloting design, marketing and business).
Fashion campaigns celebrated a more niche, contemporary view of Britishness that has boosted the brand’s cool-factor. But a company at Burberry’s scale needs to balance that fashion message with a simpler, easier-to-recognise take on British heritage to generate sufficient sales volume.
Who is Burberry’s new CEO?
Murphy has pledged “decisive action” to get the company back on track, including bringing on a new CEO, Joshua Schulman, with immediate effect.
52-year-old Schulman served as president of Tapestry’s flagship Coach brand from 2017 to 2020, where he reduced its over-reliance on struggling US department stores and undifferentiated monogram bags, as well as pulling back on rampant discounting. He also helped support the continued rollout of creative director Stuart Vevers’ more expressive, contemporary Americana vision, elevating the brand while keeping prices and merchandising in an accessible range.
In 2021, Schulman took over as CEO of Michael Kors and was lined up to succeed John Idol as the leader of parent company Capri, but exited after Idol decided to stay in his role.
“Josh is a proven leader with an outstanding record of building global luxury brands and driving profitable growth,” Murphy said.
“Burberry is an extraordinary luxury brand, quintessentially British, equal parts heritage and innovation,” Schulman said in a statement. “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.”
Will Burberry change its strategy?
Amid rising costs for quality manufacturing, as well as increased income inequality that has fuelled polarisation in the fashion market, the logic behind Burberry’s long-standing mission to play at the top end of the market remains intact — to an extent.
Falling sales and higher discounting suggest that moving further upmarket — eventually becoming a British answer to Louis Vuitton — may not be realistic. “Rather than sticking with a strategy that’s not working, could becoming a “British Coach” be the cure Burberry is looking for?” Bernstein analyst Luca Solca asked in a column last week.
Burberry says it will stick to its long-term programme of brand elevation. “Jonathan [Akeroyd] has set out a clear strategy for growth that we will build on,” Murphy said. But the move to hire a new chief executive who is strongly associated with accessible luxury sends a clear signal that the brand’s upmarket push is under review. The company said it will focus on “rebalancing our product offer to include a broader everyday luxury offer and a more complete assortment across key categories.”
The brand also said it would rebalance its communications, pulling back from its current design-forward messaging. The company is “refining our brand communication to emphasise more of the timeless, classic attributes that Burberry is known for. Our refocused marketing plans include a dedicated outerwear campaign to be launched globally in October, building on the established resilience of our house icons,” Burberry said.
How did markets respond?
Shares in Burberry rose 2 percent following the CEO shake up, even as quarterly sales missed estimates by 6 percent and the company suspended its dividend. Many analysts welcomed the leadership shake up amid poor results, and were hopeful that terms like “everyday luxury” and “inclusive products” suggest that more affordable propositions are on the way.
“Burberry’s issues include having raised prices strongly against a weaker industry backdrop and rather weak brand momentum. The new hire, Joshua Schulman, joining from Coach and Michael Kors, may pivot Burberry towards a more affordable direction, which some market participants have been calling for,” Morningstar analyst Jelena Sokolova said.
Other analysts urged caution. “With the company’s strategy unlikely to change dramatically, the change in CEO will be very much about execution. Successful implementation of brand turnarounds seems to have become more complex in an increasingly competitive luxury market, where scale, top design talent and marketing firepower matter,” Citi analyst Thomas Chauvet said.
Some investors may also be betting that Schulman will dress Burberry up for a sale (possibly to his former employers like Tapestry or Capri). With shares down by 63 percent over the past 12 months, the brand is a more attractive target.
Will other brands follow Burberry’s lead?
Shake ups to senior management, pricing and communication could be on the horizon at other firms. Burberry is certainly not the only brand struggling to navigate a slowing luxury market.
Next week, first-half results at LVMH and Hermès will show how well the luxury sector’s strongest groups are holding up in the current climate.
Kering’s Gucci, whose sales fell sharply at the start of the year, is another one to watch: the company is expected to insist that its new team appointed last year needs more time to turn things around. But pressure to make big changes could mount if Q2 sales show further deterioration.