Why Burberry is replacing its CEO

Burberry has a new CEO and is making swift changes at the top after a lackluster performance in the first half of 2024.

When it was reported last week that Burberry had a strategy problem, little was known that just a few days later chief executive Jonathan Akeroyd would be ousted from the British heritage brand.

Since Mr Akeroyd’s appointment, Burberry’s share price has continued on a downward spiral, as the move to elevate the brand, a strategy rigorously employed under the previous Italian management team of Marco Gobbetti and Riccardo Tisci. Burberry never achieved the heat needed to ignite the business, neither has it fully taken off under Akeroyd and current creative director Daniel Lee.

Incoming CEO Joshua Schulman, who like the previous chiefs Rose-Marie Bravo and Angela Ahrendts is American, understands the premium business and is a merchant at heart. Burberry has steadily been increasing its prices in new high-end accessory collections and runway ready-to-wear, but despite Mr Lee’s attempts to make the brand more British, sales have faltered as the core customer may be seeking simpler styles and more affordable products. Certainly in China, where many luxury brands are seeing a slowdown in revenue, Burberry needs a change of course. Unfortunately, Mr Schulman will be the third CEO in less than three years – Mr Gobbetti stepped down at the end of 2021 to move to Ferragamo.

With Burberry expected to make a loss in the first half of 2024, the board’s ousting of Mr Akeroyd comes at a time when a new strategy is needed to boost sales and bring relevance to the brand. The board did not give any indication that the design team would be replaced, with Mr Schulman stating, “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.”

Burberry’s chairman Gerry Murphy echoed the sentiment and said the British luxury brand was sticking with designer Daniel Lee. “Daniel is not going anywhere. He is looking forward to working with Josh,” Murphy told reporters on Monday.

A restructuring is likely to take place, which could lead to job losses in the corporate segment, as was already hinted by Burberry’s chief operating officer.

A shift from a luxury brand positioning to a more premium positioning for Burberry under new CEO Joshua Schulman could entail several strategic changes:

Price point adjustment

Potentially lowering prices slightly to make products more accessible to a broader audience, while still maintaining a premium image.

Product range expansion

Introducing more entry-level products or diffusion lines to attract aspirational consumers who may not have been able to afford full luxury prices.

Distribution strategy

Possibly expanding distribution channels to include more mid-tier department stores for certain product lines or online platforms, while still maintaining some exclusivity. There could also be a focus on markets where the premium segment is growing rapidly, such as emerging economies, while sales in China stabilize.

Marketing approach

Adapting marketing messages to appeal to a wider demographic, focusing on quality and heritage rather than prestige.

Of course, the actual strategy may differ once it’s officially announced and implemented, but for certain, the brand will be changing course without its uphill focus on luxury.