Burberry names design chief to ease new CEO's workload
LONDON (Reuters) - British luxury brand Burberry has created a new post of chief design officer, seeking to allay fears that creative head Christopher Bailey will be too stretched when he also becomes chief executive next year.
Facing investors for the first time since news he would take on a dual role, Bailey said existing senior executives will assume extra responsibilities as well, and he will have fewer people reporting directly to him than his current boss.
The 42-year-old Yorkshireman is due to take over from Angela Ahrendts as chief executive by mid-2014, succeeding a leader who delivered an approximate doubling in sales and a 250-percent rise in Burberry's share price under her stewardship.
While Bailey played a key role alongside Ahrendts in restoring cachet to a brand which had become ubiquitous, some analysts have expressed concern about his lack of experience in leading a company as well as his ability to do two jobs at once.
The 157-year-old Burberry, best known for its camel, red and black check pattern, said on Thursday it was promoting Luc Goidadin, who has worked alongside Bailey for over 12 years, to the newly-created role of chief design officer.
"I think they are being very sensible about it, they've calmed people down a bit," one top 30 shareholder in the firm told Reuters on condition of anonymity.
"He's (Bailey) surrounded by good people and they came internally ... I'm feeling reassured."
Burberry shares, down about 6 percent since Ahrendts' announced last month she would move to a new position at Apple, were up 1.7 percent to 1,487 pence at 1415 GMT.
"This will allow me to continue to remain fully involved in setting the creative direction and vision for the brand," Bailey said of the management rejig, which will see the company organised under three pillars: design, product and communication; regions; and operations and finance.
"There will be no radical change to Burberry's strategies," Bailey added, as the company met first-half profit forecasts.
The group said it made a profit before tax and one-off items of 174 million pounds ($278 million) in the six months to September 30, on a 17 percent rise in revenue to 1.03 billion pounds.
Retail revenue grew 20 percent, reflecting Ahrendts' drive for Burberry to open more of its own stores to complement lower-margin sales through other outlets such as department stores.
For the full 2013-2014 financial year, Burberry forecast new store openings would contribute low to mid single-digit percentage growth to retail revenue, while underlying wholesale revenue, excluding beauty, was forecast to increase by a mid to high single-digit percentage in the second half.
It also projected a modest rise in the retail/wholesale operating margin from the 17.1 percent achieved in 2012-13 and lifted its interim dividend 10 percent to 8.8 pence a share.
"We remain focused on executing our retail, digital and marketing strategies in the all-important third quarter and in what remains an uncertain macro environment," Ahrendts said, while giving another ringing endorsement to Bailey.
"I think this will go down as one of the greatest succession moves in the sector," she told reporters. "The company's never been stronger and Christopher's never been more ready."
($1 = 0.6254 British pounds)
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