LONDON, United Kingdom — Christopher Bailey is to leave Burberry after 17 years at the creative helm. Bailey will remain in his post as president and chief creative officer of the brand until March 31, 2018, when he will step down from the board. He will still design the Spring/Summer 2018 collection and exit the business in December after a period of transition.

"Burberry has undergone an incredible transformation since 2001 and Christopher has been instrumental to the company's success in that period," said Burberry chief executive Marco Gobbetti in a statement. "We have a clear vision for the next chapter to accelerate the growth and success of the Burberry brand and I am excited about the opportunity ahead for our teams, our partners and our shareholders."

"It has been the great privilege of my working life to be at Burberry, working alongside and learning from such an extraordinary group of people over the last 17 years," said Bailey. "I am excited to pursue new creative projects but remain fully committed to the future success of this magnificent brand and to ensuring a smooth transition."

The process of hiring a replacement for Bailey will officially begin today, according to the company. Several analysts, including Mario Ortelli at Bernstein, John Guy at Mainfirst Bank and Thomas Chauvet at Citigroup suggested that Phoebe Philo — who worked with Gobbetti so successfully at Céline — could be a replacement candidate if the chief executive decides to elevate the brand, as suggested by an open letter to Burberry penned by Ortelli in August.

For now, Philo remains in her role at Céline, though BoF reported earlier this month that LVMH is interviewing designers to replace Philo and rebuild Céline's design team in preparation for her eventual departure, though the conglomerate vehemently denied that Philo's departure was "imminent" without denying that interviews for her replacement were taking place.

"Phoebe used to work with Marco Gobbetti and they know each other well. She is a big name, and in terms of brand elevation she can be one of the possible candidates for the role," said Mario Ortelli, head of the luxury goods sector at Sanford C. Bernstein.

"In our view Phoebe Philo could move across to Burberry and recreate the powerful CEO-creative director combination Gobbetti and Philo experienced at Céline,” added Guy.

“Early feedback from investors suggests that the successful partnership she previously had with Mr Gobbetti makes her a suitable potential candidate,” wrote Chauvet, head of luxury goods equity research at Citi, in a note.

Gobbetti is expected to lay out his strategic plans on November 9 at interim results. Burberry shares fell on the news of Bailey’s departure in London trading, declining 1.46 percent.

Looks from Burberry's Autumn/Winter 2017 collection | Source: InDigital

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It was American businesswoman Rose Marie Bravo who installed Bailey at Burberry back in 2001. Bravo had been drafted in to save the British stalwart — best known for its classic, durable trench coat — from a period of brand dilution after its signature check was adopted by so-called "chavs," a derogatory term for a subset of the country's working class, and pasted on cake tins, doilies and aprons. Upon her exit in 2006, Bravo named Angela Ahrendts, who Bailey knew from his time at Donna Karan, her successor.

Over the next eight years, Ahrendts and Bailey proved a power duo. Together, they cleaned up the business, buying back licences and transforming Burberry into a credible luxury brand, in part by limiting the use of the company’s check. During their tenure, Burberry became a new star of the global luxury industry. By 2011, the company was generating £1.5 billion in revenue — a 27 percent increase over the previous year — with a market capitalisation of £5.8 billion. That was twice the rate of growth of LVMH’s revenue and market value over the same period.

At the same time, Burberry gained recognition for its digital savvy. Indeed, under Bailey the company was one of the first luxury firms to tap the power of social media and online community. Season after season, Burberry used its runway shows to showcase its pioneering engagement with new technologies, from live streaming to novel Twitter, Facebook, Instagram and Snapchat activations. The strategy was twofold, allowing the brand to experiment with promising new communications strategies while driving PR value by creating a “digital halo” for itself. This added a new layer of excitement and energy to the business, which became a rival for fashion brands in France and Italy, even if they sniffed that Burberry wasn’t a real luxury brand.

But the formula eventually became stale, reflected in runway shows that seemed to follow a strict template: the same trench coats, the same venue in London’s Kensington Gardens, the same British indie music, the same models, the same front row, right down to the same confetti which fell from the rafters during each finale.

Then there was the product. Some observers argued that the programme of brand purification put in place by Burberry's leadership, though highly successful on one level, had turned into something of a creative straitjacket, limiting its ability to create new, desirable products. Others say the focus on digital innovation had become a distraction, if not a liability, as other brands ramped up their own digital efforts and Burberry's embrace of digital marketing offered diminishing returns.

In 2014, Ahrendts decamped to run Apple’s retail programme and in a move that surprised both the industry and the financial markets, Bailey was appointed to the dual role of chief creative officer and chief executive. It proved to be the wrong move. For one, the new role seemed to undermine Bailey's ability to focus on the product. Burberry’s revenue and profit growth waned under his watch. In the fiscal year ending March 2017, underlying revenue was down 2 percent, with operating profits down 21 percent.

Still, under Bailey, Burberry made some progress: transitioning to a new operating and creative model, beginning with the consolidation of its sprawling brand hierarchy in late 2015 and cutting costs. In a move that was rapidly followed by other major players including Tommy Hilfiger and Tom Ford, Bailey also embraced "see now, buy now." On the creative side, he simultaneously changed his show venue and shifted the direction of his collections towards something more esoteric and less merchandised.

But these changes have yet to deliver the desired results. Enter Marco Gobetti, who officially took up the role of chief executive at Burberry earlier this month. Prior to joining Burberry, Gobetti led the phenomenal turnaround of Céline alongside designer wunderkind Phoebe Philo, turning the LVMH-owned business into one of the group’s top performing fashion brands.

According to market sources, Gobetti has pushed to for a creative reboot at Burberry. The first indication of this came in June when Bailey unveiled a surprise collaboration with Russian designer Gosha Rubchinskiy, whose Eastern Bloc, skater-inflected designs lean right into the "chav" stigma. But whether this path will prove fruitful remains to be seen.

There is huge global potential for Burberry, a brand that has near singular ownership of "British luxury." Unlike, say, Dior and Chanel, which have to share the idea of Parisian couture, or the many luxury brands in Milan that have to share the idea of "Made in Italy," there is only one global British luxury brand at the scale of these continental competitors, and that is Burberry. But to harness this potential, Bailey's successor must bring new focus to the creative side of the business.

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