British luxury fashion giant Burberry is having a tough time.

Shares of Burberry plummeted 16% during early afternoon hours after the company reported dismal first quarter earnings in which it warned of a slump in profits and said that it would be replacing its chief executive Jonathan Akeroyd.

On Monday, coat maker Burberry said that Akeroyd’s departure would be immediate. The company reported “disappointing” results in the luxury market that proved to be “more challenging than expected,” led largely by weak demand from Chinese customers.

Burberry said Akeroyd is leaving with immediate effect “by mutual agreement with the board.” He will be replaced as chief executive by former Michael Kors boss Joshua Schulman, who takes the helm on July 17.

The company made the unexpected announcement as it warned that it would post an operating loss for the first-half of the year if retail sales continued to fall at the current pace. Additionally, due to current trading, Burberry said it has decided to “suspend its dividend payments.”

Gerry Murphy, Chairman at Burberry, said the firm’s first quarter performance was “disappointing” but insisted that Burberry is taking “decisive action” to turn around its weak sales.

“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,” Murphy said.

Earlier this month, Burberry said that it was embarking on a 45-day consultation process that signaled it could slash up to 400 jobs, the Telegraph first reported.