Burberry braces for a profit hit after missing the mark with shoppers and seeing its rivals thrive

Burbear market… Burberry shares sank 16% yesterday after the luxury British fashion house said its CEO would immediately step down. The surprise C-suite shake-up comes as demand for Burberry trenches and plaid purses sagged: the brand’s sales fell 22% in Q1 and profit has shrunk by 40% over the past two years. Yesterday, Burberry scrapped its dividend and gave a gloomy profit warning, saying it expects an operating loss for the first half of the year.

• Plaid out: Burberry’s recent collections have missed the mark with shoppers (partly because of their high prices). Now it’s reportedly planning to cut hundreds of jobs.

• Newberry: To recoup sales, the brand plans to target higher-end shoppers with more everyday luxury items (like: $70 plaid scrunchies) and a revamped website.

Feelin’ fancy… Even as the postpandemic luxury boom cools, some designers have managed to stay hot. Chanel’s sales grew 16% last year to nearly $20B, outpacing luxury’s overall sales growth of 4%. Louis Vuitton and Christion Dior parent LVMH saw a record $94B in annual revenue. Younger generations have become big luxury buyers, with millennials and Gen Z expected to make up over 75% of the market by 2030. Designers have tailored their marketing to younger generations by hiring Gen Z-fave stars (like Zendaya, Hailey Bieber, and Sabrina Carpenter) and highlighting sustainability efforts (think: Gucci going carbon-neutral).

• Tabby town: Tapestry’s Coach did an upscale rebrand and partnered with celeb ambassadors like Lil Nas X and Camila Mendes. After years of sales declines, it’s become a hit with younger shoppers. In May, half of its new 1.2M North American customers were Gen Z and millennials.