Burberry named Christopher Bailey as chief executive officer to succeed Angela Ahrendts, who will depart for Apple in the middle of 2014.
Burberry designer is new chief executive as Ahrendts goes to Apple
Burberry named Christopher Bailey as chief executive officer to succeed Angela Ahrendts, tasking a fashion designer to helm a company that has lost its top two executives this year.
Ms Ahrendts, 53, who made Burberry a digital forerunner in the fashion world, will depart for Apple in the middle of 2014, leaving the 42-year-old Mr Bailey to assume her role while retaining his former job as chief creative officer.
Ms Ahrendts “leaves the company at a crossroads, as there is no clear development strategy in place,” said Mario Ortelli, an analyst at Sanford C Bernstein in London. Additionally, “we believe that in a company as big and complex as Burberry, even for a person as talented as Mr Bailey, it is hard to have enough time to carry out both of these roles.”
Under Ms Ahrendts, who has helmed Burberry for almost eight years, sales have more than doubled to about £2 billion and the shares have gained more than threefold as she pushed the company’s digital strategy and took Mr Bailey’s designs into new markets such as Africa.
Burberry dropped as much as 6.4 per cent and traded 4.8 per cent lower at late morning in London, the steepest decline in the UK benchmark FTSE 100 Index. The luxury-goods maker has a market value of £6.7bn.
Separately, Burberry said on Tuesdat that first-half retail sales rose 20 per cent to £694 million, falling short of the £698m median estimate of 13 analysts. Comparable-store sales increased 13 per cent, matching estimates.
Ms Ahrendts’ departure follows the resignation of Stacey Cartwright, who stepped down as chief financial officer this year. The company bolstered its management by naming John Smith to the new position of chief operating officer at the time.
American-born Ms Ahrendts built on the foundations created by former chief executive Rose Marie Bravo, who transformed Burberry from a maker of raincoats with a trademark lining and umbrellas into a worldwide luxury fashion brand. The latest departure will leave the FTSE 100 Index with two female CEOs: Alison Cooper of Imperial Tobacco Group and EasyJet’s Carolyn McCall.
Under the leadership of former Liz Claiborne executive Ms Ahrendts, Burberry has raised prices, pushed into new markets and expanded its non-apparel business. The chief executive also led the luxury industry into the digital age, streaming Burberry’s fashion shows live on its website. Last month, the company filmed the London show on Apple iPhones.
Mr Bailey, who joined in 2001, will continue in the role of chief creative officer that he has held for the past six years. In that capacity, he is in charge of the company’s overall image, including advertising and store design, in addition to product. Burberry does not plan to recruit anyone to help him with the creative side, chief financial officer Carol Fairweather said. Mr Bailey has a creative team of about 70 that report to him, she added.
“It’s a lot of change,” Rahul Sharma, managing director of Neev Capital, said in a Bloomberg Television interview. “Almost everywhere you have a very good CEO running these businesses and you have a very good creative person running these businesses.”
Burberry does not expect any change in strategy as a result of the management change, Ms Fairweather said on a conference call with reporters. “This is succession planning in action,” she said. “He was our preferred successor.”
Ms Ahrendts, who will be a senior vice president at Apple reporting to chief executive Tim Cook, said Burberry expects the business climate to remain “uncertain” and currencies volatile. The company, however, is in “brilliant shape,” she said.
* Bloomberg News