Yahoo Finance Burberry slumps after profit warning, change of CEO
Investing.com - Burberry (LON:BRBY) shares slumped Monday after the British luxury giant issued a profit warning following a disappointing first quarter, resulting in it replacing its CEO and suspending its dividend.
At 06:05 ET (10:05 GMT), Burberry stock fell over 16% to £7.37, down almost 50% so far this year.
The group said that if the recent trading slowdown continues, it expects to report an operating loss for the first half of this year and full-year operating profit below current consensus.
Additionally, the luxury house said its FY25 dividend payment will be suspended, although the final FY24 proposed dividend will still be paid in August.
It also named Joshua Schulman, who formerly led Michael Kors and Coach, as new CEO with Jonathan Akeroyd stepping down “with immediate effect by mutual agreement with the Board.”
“We are operating against a backdrop of slowing luxury demand with all key regions impacted by macroeconomic uncertainty and contributing to the sector slowdown,” Burberry said.
The company has been battling with dwindling luxury appetite across its major markets, with a cost-of-living crisis affecting its European and U.S. customers, and economic concerns plaguing Asian consumers.
“Today's warning by Burberry follows the sharp Swatch Group (SIX:UHR) miss and will add further concerns for luxury investors as the reporting season gets underway,” said analysts at Jefferies, in a note.
“The scale of the sequential sales slowdown seen in calendar Q2 is certainly greater than expected. The lack of a reprieve so far in July suggests softening comps are just not sufficient enough to provide a turn in the trend.”
Unlike Swatch, Burberry's release does not identify the Chinese cluster as the only source of weakness, suggesting in turn that there may be more deep-rooted brand specific challenges at play, Jefferies added.
Jefferies maintained a ‘hold’ rating, with a £10.00 price target.
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