Burberry names Bailey CEO as Ahrendts quits for Apple
Christopher Bailey, the designer credited with restoring the cachet to fashion brand Burberry, is to become chief executive next year when long-standing boss Angela Ahrendts will move to Apple.business Updated: Oct 15, 2013 14:33 IST
Christopher Bailey, the designer credited with restoring the cachet to fashion brand Burberry, is to become chief executive next year when long-standing boss Angela Ahrendts will move to Apple.
The 157-year-old British fashion house, famous for its camel, red and black check pattern, said on Tuesday Ahrendts would step down by mid-2014 after which Bailey would combine his role as chief creative officer with being chief executive.
News the 42-year-old Yorkshireman would hold both positions sparked concern among some analysts that he might be taking on too much, and sent shares in the group down 6% in early trading, valuing the business at 6.6 billion pounds.
"There will undoubtedly be relief that Mr. Bailey, the driving force behind the brand for the last 12 years, is staying," Morgan Stanley said in a note to clients.
"But we anticipate some investor concern about combining the Chief Creative Officer and CEO roles, which are both time consuming and require very different skill sets."
Ahrendts, who has been Burberry boss for eight years, during which time its share price has soared about 250%, will take up a newly-created position at Apple as a senior vice president with oversight of retail and online stores. She will report directly to CEO Tim Cook.
Ahrendts will be looking to do better than the last chief executive of a British company who left London to join Apple -John Browett who quit Dixons to lead the iPad and iPhone maker's global retail expansion in 2012. He left six months later.
Bailey joined Burberry in 2001 and has held the major creative role for six years, helping to rebuild the group after it became a victim of its own success in the 1990s when its trademark pattern was embraced by the mass market, losing its appeal to its core wealthy clientele.
Under Ahrendts and Bailey, the group has refocused on the luxury market, increased its store base and expanded rapidly in emerging markets like China, and it reported first-half results on Tuesday showing the benefits of that approach.
"The strategies which have underpinned our success in recent years will remain unchanged as Christopher has been an integral part in developing these over the last 12 years," chief financial officer Carol Fairweather told reporters.
Burberry, which boasts Cara Delevingne and Jourdan Dunn as faces of the brand, reported retail revenue up 17% to 694 million pounds ($1.11 billion) in the six months to September 30 -bang in line with analysts' forecasts.
Its total revenue was 1.03 billion pounds, up 14%.
"I am profoundly moved and humbled to be asked to take on the CEO role at this company that means so much to me," said Bailey. "I also feel privileged to be keeping my role as chief creative officer, as I believe that creativity and innovation have been at the heart of our success in the last ten years."
Shares in Burberry, up 41% over the last year, recovered some of their losses in early trading to be down 3.8 percent at 1,524 pence at 07:50 GMT.
"The impressive update has been overshadowed by the news that the chief executive will be leaving the company next year," brokers Hargreaves Lansdown said.
Burberry's first-half revenue growth was driven by robust demand for outerwear and large leather goods. Retail sales from stores open at least a year grew by 13 percent, helped by double-digit growth in the Asia Pacific and the Europe, Middle East, India and Africa (EMEIA) divisions and high-single digit growth in the Americas.
Burberry said in May first-half pretax profit would be below last year's 173 million pounds as its focus shifts from wholesale markets - sales through non-Burberry stores - to high-growth Latin American and Asian retail sales from Burberry branded stores.