British fashion label Burberry announced on Monday the immediate departure of chief executive Jonathan Akeroyd as it posted "disappointing" results and suspended dividends, pointing to the broader impact of the luxury sector being hampered by weak Chinese demand.
Akeroyd, 57, departs after less than two and a half years at the helm, while the Briton is being replaced by Joshua Schulman, a former CEO at American fashion brands Michael Kors and Coach.
In a statement, Burberry chair Gerry Murphy described U.S. national Schulman, 52, as "a proven leader with an outstanding record of building global luxury brands and driving profitable growth."
Schulman officially joins the group on Wednesday and said he looked "forward to working alongside (creative director) Daniel Lee and the talented teams to drive global growth, delight our customers and write the next chapter of the Burberry story."
In a separate statement, Murphy said the group's recent "performance is disappointing."
Revenue slid 22% to 458 million pounds ($595 million) in Burberry's first quarter, or three months to the end of June.
The 168-year-old label – famous for its trench coats and trademark red, camel and black check design – announced plans to cut costs, which involve suspending dividend payments.
Murphy warned that the group risked an operating loss in its first half.
Burberry's share price slumped 14.5% to 7.57 pounds following the announcements, making it by far the largest faller on London's top-tier FTSE 100 index, which was flat overall in morning trade. The shares fall further, as much as 16.6% at 11 a.m. GMT.
"Burberry grabbed the headlines in company news, bringing forward its first quarter update amid some developments which came as a shock," noted Richard Hunter, head of markets at Interactive Investor.
"The level of the group's appeal has been thwarted by weakening consumer demand, especially in the likes of China."
Burberry's share price is down 46% since the start of the year.
Overall European shares moved lower on Monday after a raft of dour updates from companies made investors, already jittery from the assassination attempt on U.S. presidential candidate Donald Trump, more cautious.
The continentwide STOXX 600 was down 0.1% as of 8:44 a.m. GMT, snapping a three-session win streak.
Leading losses were shares of Burberry, as the group named a new chief executive, followed by the low performance of Swiss Swatch Group.
Its shares plummeted 10.8% as the world's biggest watchmaker reported a steep fall in first-half sales and earnings.
Personal and household goods sectors, housing both stocks fell 1% and led sectoral declines.
"The luxury sector is also under the negative impact of the number that we got from China," said Ipek Ozkardeskaya, senior market analyst at Swissquote Bank.
"The latest numbers were boosted by some kind of base effects where they were compared with a weak base. However, moving forward, all that base effect's positive impact is going to be waning."
Highlighting troubles across the luxury fashion sector, Gucci owner Kering in April issued a profit warning, citing a weak Chinese economy.
China on Monday posted lower-than-expected growth of 4.7% in the second quarter.
That represented the slowest rate of expansion since early 2023 when China was emerging from a crippling zero-Covid policy that strangled growth.
Retail sales – a key gauge of consumption – rose just 2% in June, down from 3.7% growth in May.
"Chinese sales can no longer be taken for granted" for the likes of Burberry, Chris Beauchamp, chief market analyst at online trading platform IG, said Monday.
