LONDON, United Kingdom — British luxury brand Burberry has announced that current chief creative officer and chief executive Christopher Bailey will become the company's chief creative officer and president, handing over the title of chief executive to Céline’s Marco Gobbetti, as part of an ongoing business review.
Bailey, who was appointed chief executive in October 2013 in addition to his duties as chief creative officer, will add the newly created title of president and oversee all elements of brand and design, working in partnership with Gobbetti, who will join the company next year. Shares in Burberry jumped 7.9 percent on the news, their strongest day in three years.
"I am very excited that Marco Gobbetti is joining us as chief executive officer and as a partner to me,” said Bailey in a statement. “Marco brings incredible experience and skills in luxury and retail with him that will be invaluable to us… On a personal level, I know that we are going to enjoy a wonderfully collaborative partnership that makes me very excited for our future at Burberry."
Both Bailey and Gobbetti will report to Burberry chairman John Peace. In a separate statement, Burberry also announced it had appointed Julie Brown as chief operating and financial officer. Brown will join the company in early 2017. Carol Fairweather, Burberry's current chief financial officer has decided to step down after 10 years in the role to pursue new opportunities. She will help to manage the transition following Brown's arrival and leave at the end of its financial year.
In a statement, Peace said: "I am delighted that Marco will be joining us to work alongside Christopher in his new role as we embark upon the next chapter in our 160-year-old success story. He has an outstanding track record of delivering growth in the luxury industry and his vision for the sector and how it will evolve is extremely impressive. The board firmly believes that these new leadership roles coupled with actions, identified in the recent business review, will significantly enhance our ability to deliver long-term sustainable growth and sector outperformance over time."
"Since taking on the combined role of chief executive and chief creative officer, Christopher Bailey has done an excellent job set against a backdrop of challenging market conditions," Peace continued. "The review that he has led into our ways of working is the blueprint for the next phase of Burberry's evolution. In order to maximise our ability to successfully implement these plans, Christopher identified the need for a new chief executive for the business who could partner with him as we execute on the new strategies and I am excited to see what they will do together."
Gobbetti is currently chairman and chief executive of French luxury brand Céline, a position he has held since 2008. He has worked in the industry for more than 20 years, having previously worked at Givenchy and Moschino.
Burberry has struggled in recent quarters due to a sales slowdown in Hong Kong and mainland China, plus lower sales in European capitals as tourist shoppers stayed away from Paris following last year's attacks. In May, the company reported a 10 percent drop in annual adjusted pretax profit. Bailey’s total pay package also fell to £1.89 million for the year ended March 31 2016, down from £7.5 million the previous year.
Luca Solca, head of luxury goods at Exane BNP Paribas, called the Burberry shake-up positive. "All in all, this is a step forward for Burberry, where we perceived a need of reinvention and stronger direction," Solca told BoF. "The first issue to be tackled was to eliminate the joint role. This will be done in 2017. More could change further down the road."
"Clearly, Marco will have to prove himself in a much larger company than Céline (we estimate Céline to have had sales of €600 million in 2015), while Julie will have to make her experience relevant and credible in a very different industry. Investors should be aware, of course, that likely disappointing underlying performance in 2016 could moderate short term enthusiasm on the share price and that we will have to wait a few quarters before the impacts of the new leadership translate in the business," continued Solca.
Mario Ortelli, senior research analyst at Sandford Berstein, said the appointments would be welcomed by investors who have been looking for more strategic management decisions from the company after its lacklustre results recently.
"The company has appointed a CEO with a lot of experience and a good track record in the luxury industry... Personally we like this decision to keep Mr Bailey as chief creative director and president of the company because Christopher is the face of the brand and this is helpful," he said.