Burberry parts ways with Bailey as new CEO refashions brand

World
Europe

Christopher Bailey, who fashioned Burberry into a global label, will part ways with the British trench coat maker next year as its new chief executive moves to revitalize the brand.

After joining Burberry from Gucci in 2001, Bailey worked with former CEOs Rose Marie Bravo and Angela Ahrendts to make its classic camel, red and black check designs must-haves for followers of fashion around the world.

Bailey will forego 16 million pounds (21 million US dollars) in share awards when he steps down at the end of March to pursue new projects, Burberry said on Tuesday.

Ad campaigns fronted by model Kate Moss helped sales rise in the early 2000s, but Burberry became a victim of its own success when its check pattern was widely counterfeited.

However, Bailey successfully re-established its upmarket credentials and became CEO when Ahrendts left for Apple in 2014. But Burberry’s growth faltered, first as demand in Asia slowed, and then as it failed to ride a rebound.

The 46-year-old designer was paid 3.5 million pounds in the year to to end-March.

His compensation had long been a focus, and a near 20 million pound share award which was not linked to performance was opposed by a majority of shareholders in 2014. Some of these shares, which were nevertheless awarded by Burberry’s board, are included in those now being surrendered by Bailey.

File photo of a Burberry store /Reuters photo

Burberry said Bailey would step down from his board positions of president and chief creative officer at the end of March, but would support Marco Gobbetti, who took over from him as CEO, until the end of December next year.

Bailey’s exit will enable Gobbetti to revamp Burberry’s creative direction as well as its operations, analysts said.

“Burberry ... has become somewhat predictable and deja vu,” Exane BNP Paribas said.

The company, which still manufactures trench coats in Yorkshire, northern England, poached Gobbetti from Celine to overhaul the business earlier this year, but left Bailey with creative control.

Gobbetti has already made changes to the company founded in 1856 by Thomas Burberry, cutting costs and striking a licensing deal for makeup and perfumes after they were brought in-house.

Transition Risk

Burberry moved upmarket under Bailey, emphasizing its British heritage and launching new leather goods like the Bridle bag.

He also used social media and shook up traditional fashion production cycles by enabling people to buy designs as soon as they were shown on the catwalk.

The Burberry check baseball cap, a symbol of its earlier ubiquity, was resurrected in Bailey’s recent collection, priced at 195 pounds.

Shares in Burberry, which listed at 230 pence in 2002, were trading down 1.1 percent at 19.01 pounds at 1623 GMT.

Shareholder Old Mutual Global Investors said Bailey’s departure was not a surprise as his role had already changed.

“Had this been a few years ago then it potentially would have been a big deal, given how important Bailey has historically been to the success of the brand,” deputy fund manager James Bowmaker said.

File photo of Christopher Bailey /Reuters photo‍

“Since then, however, Burberry has broadened out its creative talent.”

Analyst Jelena Sokolova at Morningstar said Burberry’s new products were doing well, but staples like coats had lagged and a creative overhaul was never a sure-fire winner for a brand.

“A transition is always a risk,” Sokolova said.

Kering’s Gucci has been reinvented by Alessandro Michele over the past two years, with colorful, rococo designs that have fired up sales at a far faster rate than competitors.

Finding a new designer can be a long process – France’s Christian Dior took around eight months before appointing a new creative head last year, while new hires do not always work out.

France’s Lanvin is on its third designer in two years after parting ways with one-time star Alber Elbaz in 2015.

French luxury powerhouse LVMH recently denied a report that Celine designer Phoebe Philo was set to leave, although the Business of Fashion report has fueled fresh speculation that she could follow Gobbetti to Burberry.

The pool of potentially readily available top names includes Elbaz and Bouchra Jarrar, two Lanvin alumni, Ricardo Tisci, who left LVMH’s Givenchy earlier this year, and Hedi Slimane, former artistic director at Kering’s Saint Laurent.

Source(s): Reuters