Burberry names Bailey CEO as Ahrendts quits for Apple
LONDON (Reuters) - Burberry boss Angela Ahrendts, who has overseen a doubling in sales and a 250-percent jump in the shares of the British fashion brand, will leave to take up a job at Apple next year and hand over to creative director Christopher Bailey.
Shares in the 157-year-old group, which is best known for its camel, red and black check pattern, fell 7.6 percent on Tuesday after Burberry said the 42-year-old Bailey would act as both chief creative officer and chief executive.
"I would say that the creative and CEO roles do not necessarily sit easily together. Angela was always seen as a business person who had a sense for the fashion. A fashion person with a sense for business might be a harder sell as CEO," one top 20 Burberry shareholder said on condition of anonymity.
Ahrendts and Bailey are credited with helping to restore Burberry's cachet 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.
As well as steering the brand back upmarket, they shifted to a more profitable strategy of selling clothes and accessories through Burberry shops rather than department stores and led a big expansion into fast-growing emerging markets like China.
Ahrendts, a former executive of U.S. fashion house Liz Claiborne who has headed Burberry since 2006, will take up a newly created position at Apple as a senior vice president with oversight of retail and online stores.
The 53-year-old American, who also introduced webcast catwalks and a website dedicated to Burberry's traditional trenchcoats, will report directly to Apple CEO Tim Cook.
Ahrendts, who took home 6.8 million pounds ($10.9 million) in Burberry's 2012-13 financial year, will be looking to do better than the last CEO of a UK retailer who left London to join Apple - John Browett, who quit Dixons to head the iPad and iPhone maker's global retail expansion in 2012. He left six months later.
Ahrendts was the highest paid FTSE 100 boss in Burberry's 2011-12 financial year.
Her exit will leave just two female CEOs of blue-chip UK companies - Alison Cooper of Imperial Tobacco and Carolyn McCall of easyJet, despite a government-backed campaign to increase the number of women in top executive jobs.
Moya Greene, the boss of Britain's newly privatised Royal Mail postal service, is likely to join them later this year when it enters the benchmark FTSE-100 index.
NO STRATEGY CHANGE
Burberry, which boasts models Cara Delevingne and Jourdan Dunn as faces of the brand, said its strategy would be unchanged under Bailey and that the Yorkshireman was well able to cope with dual roles.
"He's also got an incredibly sharp commercial mind," said finance chief Carol Fairweather, adding he would be supported by strong creative and operational teams beneath and alongside him.
History has shown that brands directly managed by their artistic director can be successful, for example Giorgio Armani and in the early days of the brand Ralph Lauren.
Burberry, which trades globally from around 470 stores, concessions and outlets and employs a staff of nearly 10,000, reported retail revenue up 17 percent to 694 million pounds in the six months to September 30 - bang in line with analysts' forecasts. Total revenue was 1.03 billion pounds, up 14 percent.
Growth was driven by a 13 percent rise in sales at stores open over a year, with double-digit growth in the Asia Pacific and Europe, Middle East, India and Africa (EMEIA) divisions and high-single digit growth in the Americas. Outerwear and large leather goods categories performed particularly well.
The firm said mainland China - the engine of luxury industry growth in recent years but which has been faltering of late - delivered a high single-digit percentage growth in comparative store sales in the second quarter and that it was pleased with its performance there.
LVMH, the world's biggest luxury group, is due to report third-quarter sales data after the market close.
Burberry said it expected underlying first-half pretax profit to be around last year's 173 million pounds, better than previous guidance for a decline, but added the recent appreciation of sterling, if it persists, could impact the translation of second-half revenue and profit.
Burberry shares, up 41 percent over the last year, closed down 121 pence, or 7.6 percent, at 1,462.5 pence, valuing the business at about 6.5 billion pounds.
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