Burberry, a fashion firm, replaced its CEO in an attempt to turn things around after witnessing a sharp decline in sales, reported BBC.
Burberry has announced that Jonathan Akeroyd will be leaving the firm "with immediate effect" and will be replaced as CEO by Joshua Schulman, the former CEO of US brand Michael Kors.
The company announced a dramatic decline in sales and a change in leadership at the same time that the market for luxury products, especially in China, continued to weaken.
The corporation declared that if present trends continue, its profits will fall short of projections and that it was considering job cuts.
Famous for its unique camel, red, and black check pattern, Burberry reported a 21% decline in retail sales in the three months ending June 29.
"Disappointing," according to Chairman Gerry Murphy, the data show that the luxury sector is "proving more challenging than expected."
Burberry was trying to go more upmarket under Mr. Akeroyd, but Mr. Murphy stated that the company was now "taking decisive action to rebalance our offer to be more familiar to Burberry's core customers whilst delivering relevant newness".
The attempt go "further up the luxury market has alienated many of their core consumers who have in effect been priced out of the brand," according to Catherine Shuttleworth, head of marketing agency Savvy.
"Burberry has lost some focus on who its customer really is and the statement today that they will refocus the brand back to everyday luxury will be welcomed," she stated.
Mr. Schulman, who oversaw Jimmy Choo's London operations from 2007 to 2012, takes over as Burberry's fourth CEO in a decade. Mr. Akeroyd, his predecessor, held the position for a period of two years.
In an effort to save money, Burberry has decided to stop paying dividends to shareholders for the current fiscal year.
According to Mr. Murphy, the steps being implemented, such as cost-cutting, will boost the business's performance in the second half of the year.
There had been rumors earlier this month that the corporation might lay off hundreds of workers.
Burberry's chief financial officer, Kate Ferry, stated on Monday that she was unable to comment on job losses due to an ongoing consultation process. However, she did mention that several hundred positions may be in jeopardy, mostly inside the company's UK corporate division.
The market for luxury goods has been declining, which has negatively impacted Burberry's sales, with the Americas and China experiencing some of the largest declines.
According to Burberry's most recent report, sales in the Asia Pacific area decreased 23% from a year ago, with mainland China seeing a 21% decline. Additionally, sales in the Americas fell by 23%.
The corporation reported a 40% decrease in full-year profits in May of this year.
Not just Burberry is a luxury brand that is affected by the economic slump. The luxury goods company Kering reported a decline in demand for its Gucci brand in China in March, prompting it to issue a profit warning.
Sales of mid-range brands in particular are being impacted by a shift in customer views in China, according to Pauline Brown, the former head of luxury conglomerate LVMH's North American division.
"Every market that moves from an emerging to a more developed stage exhibits that phenomenon. She told the BBC World Service that as tastes change, so does people's desire to flaunt their money.