Burberry Stock Sinks. Is the Problem Its CEO or the Luxury Consumer?

Burberry had a nightmarish start to the week on Monday after the luxury clothing brand warned of a slump in its profits and replaced its CEO.

The UK-based company’s American depositary receipts were down 16.9% to $9.79 shortly after the opening bell, while its London-listed shares slid 16.8% to 737 pence to their lowest level since 2010.

It’s hard to tell what part of a dire trading update that Burberry published on Monday sparked the selloff, with the company flagging weaknesses in the luxury sector and announced a leadership shake-up.

The fashion giant said in a statement that called its performance for the fiscal year “disappointing” and warned that the luxury market “is proving more challenging than expected”. It’s set to post its earnings for the quarter that ended on June 30 on Friday.

Burberry also announced a change at the top, with former Michael Kors boss Joshua Schulman set to replace outgoing CEO Jonathan Akeroyd, and suspended dividend payments.

“We are taking decisive action to rebalance our offer to be more familiar to Burberry’s core customers whilst delivering relevant newness,” Chair Gerry Murphy said in a statement. “We expect the actions we are taking, including cost savings, to start to deliver an improvement in our second half and to strengthen our competitive position and underpin long-term growth.”

Signs of weak consumer demand have weighed on luxury brands this year, with the slowdown particularly evident in China, which has struggled to reboot its economy ever since calling time on three years of harsh zero-Covid lockdowns at the end of 2022.

Akeroyd had also tried to take Burberry upmarket in a strategy that alienated some would-be shoppers. Fashion blog Miss Tweed reported earlier this year that Murphy had started interviewing potential replacements.

The luxury giant’s rivals French-listed peers also fell after the disappointing trading update. LVMH slipped 2.7%, while Hermès dropped 2.4% and Dior fell 1.7%.

A new investment fund targeting celebrity-founded consumer brands has secured US$40 million in commitments and is rapidly approaching its US$50 million fundraising target, signalling growing investor appetite for alternative opportunities beyond traditional asset classes.

The Global Talent Fund, which has a maximum raise of US$100 million, focuses on building and investing in consumer businesses alongside celebrities, athletes, and influential personalities who play an active role as co-founders rather than simply endorsing products.

The strategy is based on the belief that changes in consumer behaviour, particularly the rise of social media and digital engagement, have fundamentally altered how brands are built and scaled.

GTF founding partner Jeremy Hunt, who is helping lead the fund’s strategy, said consumers increasingly feel connected to personalities they follow online and are more willing to support products developed by those individuals.

“Consumers are searching for content to engage with, and when a celebrity they like or follow takes them on the journey of creating a product or brand, they genuinely feel part of that process,” he said.

The fund is targeting high-growth consumer sectors including wellness, hydration, beauty and recovery, areas Hunt believes continue to benefit from strong global demand and ongoing innovation.

Rather than backing celebrity endorsement deals, the fund is seeking businesses where talent is deeply involved in product development, brand creation and long-term growth.

According to Hunt, authenticity remains one of the biggest differentiators between successful celebrity-backed brands and those that fail.

“The consumer can see clearly if someone is simply being paid to promote a product,” he said. “The winners are typically the brands where the celebrity has genuinely helped build the business from the ground up.”

The model has attracted support from several prominent Australian investors and business families, reflecting broader interest in alternative investments with global growth potential.

Hunt said consumer brands offered a level of tangibility that many investors found appealing.

“Consumer brands are what we touch, feel, smell and taste every day,” he said. “Our investors understand the growth potential in the model, but they also want to be part of the journey.”

The fund’s rapid progress towards its fundraising target comes amid growing recognition that celebrity influence, when combined with strong commercial execution and scalable business models, can create significant enterprise value.

With several high-profile celebrity-founded businesses generating billion-dollar exits in recent years, supporters of the strategy believe the opportunity remains in its early stages.

Burberry Stock Sinks. Is the Problem Its CEO or the Luxury Consumer?

With US$40 million already committed, the Global Talent Fund is attracting investor attention with a strategy focused on building globally scalable consumer brands alongside high-profile talent.