Long-time LVMH executive, and Burch’s new husband, Pierre-Yves Roussel has been appointed chief executive of her namesake business, effective early 2019. Roussel, long-serving chairman and chief executive of the LVMH Fashion Group, stepped down from the role in early 2018, acting as a special advisor to the conglomerate’s chairman and chief executive Bernard Arnault until last month.
“This was not something we took lightly,” Burch said of the appointment. “Until I met Pierre-Yves, there isn’t anyone I thought would be right for it.”
This is the second of two major partnerships recently forged between Burch and Roussel. In November, the long-time couple were married, first in a private ceremony in Paris, followed by a second event at Burch’s private residence in Antigua. Both Burch and Roussel said that the timing of the new appointment and their marriage was purely coincidental.
Founder Tory Burch, who is presently both chief executive and creative director of her brand, will relinquish the chief executive title. (She founded the brand in 2004.) Her new title will be executive chairman and chief creative officer, though the newlyweds are expected to work together closely going forward. Roussel, who was nominated for the role by the board of directors, will report to that group, which includes Burch as well as BDT Capital’s Byron Trott and General Atlantic’s Bill Ford — both investors in the brand — as well as former Google chief Eric Schmidt.
The company’s three regional presidents — for Europe, APAC and Japan — will now report to Roussel. (Whether or not US president John Mehas, who recently decamped for Victoria’s Secret, will be replaced has yet to be determined. Burch and Roussel will evaluate the company’s leadership needs in the US market when Roussel joins in the new year.)
Roussel will be based in New York alongside Burch, who underscored that she will not be stepping back from the business in any way.
Instead, Burch said that Roussel’s appointment was the culmination of four years of restructuring, including rethinking everything from product distribution and back-end technology to allotment of human resources and discounting cadence. (In 2015, 100 employees were laid off to allow for the revamp, paving the way for over 200 new hires since.)
Most recently, the company bought back an approximately 20 percent stake in the business from private family investment company Tresalia Capital, which Burch said simplifies the shareholding structure. Investors General Atlantic and BDT Capital Partners maintain a stake in the business, which they acquired in 2013.
We are in a better position, but we still have work to do.
“We are in a better position, but we still have work to do,” Burch said, noting her belief that while full-price sales are still a challenge in the discount-driven US market, where the majority of Tory Burch purchases take place, the American customer is “open to rethinking” that pattern when the product in question feels less ubiquitous.
Today, the Tory Burch business has grown to well over $1 billion in annual revenue, although certain categories — including ready-to-wear — have had to shrink in order to grow, Burch said. Tory Sport, the standalone activewear brand launched in 2015, has also faced challenges. “I had forgotten how hard a start-up is,” she said. “We’re committed and excited, but it’s [transformed into] a tighter assortment, with the right balance of fashion and functional sportswear as well.” Careful distribution across the board — as well as tighter control over adjacencies at multi-brand retailers — is starting to deliver results, she said. The company currently operates 250 stores worldwide, with four dedicated to Tory Sport, while several others feature Tory Sport shop-in-shops or selections of Tory Sport product.
Roussel’s arrival, Burch said, would allow her to focus on product and also customer service. For instance, she plans to ramp up her personal appearances, which have taken a backseat to operations over the past few years. (In 2014, Ralph Lauren veteran Roger Farah joined the company as Burch’s co-chief executive, but moved into an advisory role in February 2017. Farah is now the chairman of the board of Tiffany & Co.)
“I was being pulled in a lot of directions,” she said. “For me to be able to focus on brand and knowing that Pierre-Yves is taking care of the operations... there’s a level of trust. We are fundamentally aligned in the way we see business.”
As for Roussel, who moved into an advisory role at LVMH in early 2018, exploring other full-time opportunities over the last year clarified his interest in supporting the Burch business. “It almost felt awkward to take a job at a big US brand or retailer,” he said. “Why bother creating value for others — why not do it for us?”
After all, fashion businesses are often family businesses, as Tory Burch has been from the beginning. Burch’s brother, Robert Isen, is president of corporate development and its chief legal officer. Two of Burch’s stepchildren from her marriage to co-founder Christopher Burch also work at the company: Izzie Burch is creative director of Tory Sport and Pookie Burch, who also runs her own label, Trademark, is a design consultant. (Christopher Burch now owns a nominal percentage of the business after multiple buyouts of his shares over the past decade.)
But Roussel said that he had been interested in Tory Burch long before the newlyweds were romantically involved: they first sat down six years ago, when Roussel was scouting the business as a potential LVMH acquisition. “I don’t think anyone has built a brand of that size in such a short period of time,” he said, noting that the deal never materialised because of “complications” with shareholders. “I felt connected with the brand in the first place because I like the positioning of it. It’s luxury in terms of doing beautiful products, but it’s not uber-luxury,” he continued, unconcerned by the challenges facing the accessible-luxury category in recent years, with competitors Michael Kors, Kate Spade New York and Burberry taking a hit.
I felt connected with the brand in the first place because I like the positioning of it.
“I think there is more space in that market than there has ever been,” he said, noting that luxury brands have raised prices so much that it has created an even larger gap between the high and the low. “Tory has also created a brand which is very unique. Most [accessible luxury] brands are more knock-offs of luxury brand, without a specific identity. There’s nothing else like Tory Burch in the market.”
Tory Burch also remains underpenetrated globally. “There is a significant business globally, but it’s not as big as most competitors of the same size,” he said.
Of course, Roussel’s arrival will also stir up speculation that the Tory Burch brand might be a potential acquisition target for a group like PVH, Tapestry or Capri Holdings, given that there are so few healthy, sizeable businesses with further headroom to grow. However, neither Roussel nor Burch seem to be overly focused on how big the business can get.
“I don’t ever think about size from a business standpoint,” Burch said. “I’m thinking about how we can elevate [it], how we can make the product better and better, the customer experience better and better.”