Ahrendts to step down at Burberry

Angela Ahrendts at The New York Palace Hotel on May 28, 2009 in New York City.

Story highlights

  • Burberry chief executive Angela Ahrendts is taking a senior role at Apple
  • The American businesswoman will become senior vice-president of retail and online stores at Apple
  • Christopher Bailey, the luxury goods group's chief creative officer, will take over when Ahrendts leaves in mid-2014
  • Ahrendts said in a statement she believed she was leaving the group "in brilliant shape"

Burberry chief executive Angela Ahrendts, is swapping expensive trenchcoats for Silicon Valley as she steps down from the luxury goods maker to take a senior position with Apple.

The American businesswoman, who joined the British group in 2006, will become senior vice-president of retail and online stores at Apple.

Christopher Bailey, the luxury goods group's chief creative officer, will take over when Ms Ahrendts leaves in mid-2014.

Ms Ahrendts joined Burberry in 2006 and has overseen its expansion into China and other emerging markets.

Her move to Apple follows the appointment of John Browett last year as head of Apple's retail operations. Mr Browett was poached from Dixons, the electrical retailer, but stepped down abruptly after just six months in the job.

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"It has been an honour to have partnered with Sir John Peace [Burberry chairman] and Christopher for the last eight years," said Ms Ahrendts.

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Burberry shares, which have gained more than 40 per cent in the last year, were trading 5.4 per cent lower £15 in early dealings.

Since Ms Ahrendts joined Burberry on July 1 2006, the market value of the company has risen from £2.1bn to £7.03bn. In the last five years alone, the company's shares have risen 461 per cent compared with a 59.5 per cent gain in the FTSE 100.

Her departure from Burberry leaves the FTSE 100 with just two female chief executives -- Carolyn McCall at easyJet and Alison Cooper at Imperial Tobacco. However, the Royal Mail is expected to soon join the FTSE 100 with a female chief executive, Moya Greene.

Mr Bailey was hired by then Burberry chief executive Rose Marie Bravo in 2001 -- aged just 29 to replace Italian designer Roberto Menichetti as creative director. Just a year later, Mr Bailey was named GQ Man of the Year for Emerging Talent in Menswear.

Six years later, Forbes named Mr Bailey as one of the world's 10 most influential tastemakers in fashion and that same year he won Designer of the Year at the British Fashion Awards.

Some analysts raised concern during a conference call this morning about Mr Bailey's appointment, given that he had no experience of running a business, and would be combining the chief executive role with that of creative director.

However, Carol Fairweather, finance director, defended the appointment.

"[Christopher Bailey] has been at Burberry for 12 years. Nobody knows it better than him. It's s design led business, with a creative leader at the helm. He also has an incredibly sharp commercial mind," she said.

Mr Bailey would be supported by Burberry's existing commercial and creative teams, she said, and there were no plans to bolster Burberry with fresh creative talent.

"He has a very strong team beneath him on the creative side....[We have] a very strong management team working alongside him, many of whom he has been working with for in excess of five years," said Ms Fairweather.

Analysts at Citi said Mr Bailey's appointment was "a strong commitment to the firm where he has worked since 2001. This constitutes an interesting choice, not unusual in the fashion industry."

Ms Ahrendts said in a statement she believed she was leaving the group "in brilliant shape".

Her tenure has not been without controversy, however. She took home £16.9m in 2012 -- more than any other chief executive on the FTSE 100.

The disclosure did not please some investors, though the company's strong performance, and rising share price, meant she did not attract the ire of other highly paid executives.

Investors were more unsettled, however, when Burberry issued a shock profit warning just over a year ago, prompted partly by a decline in demand from China.

The unexpected disclosure, which wiped more than a fifth off the company's share price on the day, stirred concerns that a slowdown in Chinese demand was finally affecting luxury groups, which had proved resilient in the face of the global economic downturn.

Burberry shares fell again in February this year, on news that the group's finance director, Stacey Cartwright, was stepping down. Ms Cartwright had been credited with a strong contribution to the company's success in recent years.

The news of Ms Ahrendts departure came just days after she unnerved investors again with comments that the slowdown in China may be here to stay.

But Ms Fairweather said the events were not linked, and Ms Ahrendts's recent comments related to the profit warning and Burberry was " delighted by our first half trading performance" in China.

Ms Ahrendts's departure comes in the midst of Burberry building its beauty business, an important new arm for the business, after taking direct control of this area.

But Ms Fairweather said this would not be affected by the management change.

"We have recruited functional experts [ in] creative, supply chain, marketing. We have a very strong team in place, and Christopher absolutely overseeing the whole creative and whole strategy for beauty," she said.

Ms Ahrendts' replacement, Christopher Bailey, said on Tuesday he was "profoundly moved and humbled" to be asked to take over.

"It has been my privilege to work with people right across the company over the last 10 years, and whilst I am sad no longer to have the inspirational leadership of Angela, who has been an absolute joy to work with, I feel more than confident that part of her legacy is an enormously strong team in all of our areas," he said.

Apple and Burberry have had links before. Burberry used Apple's new iPhone 5s in a promotional partnership to capture its Spring/Summer 2014. Ms Ahrendts also has long been an enthusiastic user and chamption of Apple products such as ipads within Burberry.