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October 18, 2013 6:20 pm
Christopher Bailey will be an “unconventional” chief executive of Burberry, the luxury goods group has told investors, as it grapples with the departure of Angela Ahrendts in its biggest management transition for nearly a decade.
Mr Bailey is expected to communicate with the City when the group reports its annual and interim results, but much of the “heavy lifting” and contact with investors would be carried out by finance director Carol Fairweather, chief operating officer John Smith, and the group’s investor relations division, said people familiar with the situation.
Burberry announced on Tuesday that chief executive Ms Ahrendts would leave in mid-2014 to become head of Apple’s online and physical stores, to be succeeded by Mr Bailey, the designer credited with helping turn Burberry into a global luxury brand.
Mr Bailey will over the next few days be talking to his creative team and the senior executive team about how responsibilities will be organised. Burberry is expected to give further details next month when it announces its interim results.
One person close to the board said Mr Bailey would carry out the chief executive’s role in a “very different way”, from Ms Ahrendts.
“What he is not going to do is take his eye off the 8-ball in terms of all the creative stuff, which is so crucial to the company,” the person said.
But Luca Solca, managing director at Exane BNP Paribas, said the appointment was “unprecedented”, except in cases where the designer was the founder of the business.
Some investors and analysts expressed concern earlier this week that Mr Bailey would be overburdened by holding both the chief creative and chief executive roles.
“The biggest fear would be that he is bogged down in doing corporate stuff and doesn’t continue to drive the brand, so I think ‘unconventional’, with the weight lifting off his shoulders, would be good,” said one top 10 shareholder.
Another person familiar with the situation pointed favourably to the hiring of Mr Smith, the former head of BBC Worldwide, and said Burberry had also appointed regional chief executives for Asia and Europe.
However, Mr Solca said much of the top team would be new, at a delicate time for the business, as it builds its beauty arm and prepares for the end of its licence in Japan in 2015.
“That opens the door potentially to uncertainty,” he said.
The top 10 investor said Burberry needed to reorganise responsibilities to take some of the pressure off Mr Bailey, whether by expanding Mr Smith’s role or elevating one of the creative team. Mr Bailey was “very integral to the brand”.
Ms Ahrendts is understood to have resigned on Monday. She had been widely expected to remain until 2015. John Peace, chairman of Burberry had become aware of Apple’s offer a few days before, and tried to persuade her to stay.
People close to the board said it would have preferred Ms Ahrendts to have stayed and continued to run the business for a longer period of time. However, they insisted Mr Bailey had always been the preferred successor.
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