Joshua Schulman, the former head of Coach and Jimmy Choo, has been appointed as the new CEO of Burberry. He replaces Jonathan Akeroyd, as the British luxury company issued its latest profit warning and confirmed plans to cut several hundred jobs.
Schulman, who began his retail career at a young age, must now revitalize the 168-year-old brand. Despite the challenges, Chairman Gerry Murphy emphasized that there are no plans to reverse the current strategy.
Akeroyd's vision, together with Creative Director Daniel Lee, to develop Burberry from a traditional brand known for trench coats and scarves into a modern British luxury brand for expensive leather handbags and accessories, failed after two years in office. Murphy admitted that the brand may have "gone a bit too far too quickly," especially at a time when customers felt challenged by higher price points.
Murphy emphasized, however, that Burberry will not lower prices across the board. Instead, the focus should be more strongly placed on the sale of traditional products and the introduction of lower price points.
Schulman, who is moving from New York to London to take up the new position, credits his mother for his love of fashion. After graduating from New York University and the Parsons School of Design, he held senior positions at Gucci and Yves Saint Laurent. He spent five years in London as CEO of Jimmy Choo before returning overseas.
At Neiman Marcus, where he was the president of the luxury department store Bergdorf Goodman, he revamped the layout of the premium store and expanded its online presence. Later, he led Coach and contributed to revenue growth.
Despite rumors about talks with potential candidates to replace Akeroyd, Murphy emphasized that serious discussions had only recently begun. Schulman was originally considered for a board role before it became clear that he was interested in a larger position.
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"Murphy defended Schulman's compensation package, which can amount to up to £5.6 million per year including bonuses, and emphasized that a large portion of it depends on shareholder success.
Analysts like Luca Solca from Bernstein, however, question the decision to replace Akeroyd so early if no major strategic changes are planned.
Despite the challenges, Burberry recorded a 28 percent increase in adjusted operating profit to a record high of SEK 8.2 billion (USD 777.8 million) in the second quarter. Net profit rose to SEK 5.35 billion, driven by higher volumes and lower material costs.
The revenue slightly decreased by 0.7 percent to SEK 101.45 billion. The retail sales increased by 15 percent to 205,400 vehicles sold in the quarter.
Rowan emphasized that Burberry should continue to be positioned as a luxury brand, but would focus more on its core competencies such as outdoor clothing and scarves.
