Burberry's Christopher Bailey Replaced as CEO by Marco Gobbetti -- Update

By Saabira Chaudhuri 

Burberry Group PLC has named luxury veteran Marco Gobbetti as its new chief executive, replacing Christopher Bailey who has attracted strong criticism during his two-year tenure as the British fashion label's CEO and creative head.

The company is also replacing its Chief Financial Officer Carol Fairweather, who has worked closely with Mr. Bailey since he became CEO in May 2014, with the CFO of global medical technology business Smith and Nephew PLC, Julie Brown. Smith and Nephew said the search for a new CFO is under way.

Burberry's surprise announcement--which comes after investors have for months groused that the 45-year-old Mr. Bailey was ill-equipped to juggle the dual roles of CEO and creative head of a company Burberry's size--sent shares up 6.4% in afternoon trading in London to GBP12.36.

Mr. Gobbetti is the CEO and Chairman of Céline, the influential LVMH-owned fashion and accessories brand. He will begin as Burberry's CEO starting next year, although Burberry didn't give an exact date.

Mr. Gobbetti has worked in luxury for the past 20 years on brands such as Givenchy, Moschino and Bottega Veneta. His appointment comes as Burberry has seen sales hammered in key markets such as Greater China and the U.S. for a string of quarters, with little respite. The company's shares have dropped 22% since Mr. Bailey replaced longtime CEO Angela Ahrendts at the helm.

Mr. Bailey--who has been demoted to Burberry's president and chief creative officer--recently announced a cost-cutting program and a share buyback but the moves did little to quell disquiet about the company's long-term prospects.

Burberry has a large store footprint in China where sales have been hit by an anticorruption drive, and in Hong Kong where sales have fallen following unfriendly visa policies that have discouraged visitors from mainland China.

Relative to peers such as LVMH Moët Hennessy Louis Vuitton SE and Prada SpA, Burberry is underrepresented in Europe and Japan, which have seen an influx of Chinese shoppers.

The company last month said Mr. Bailey had received a 75% pay cut for fiscal 2016, following a year in which the trench-coat maker reported an 8% fall in full-year profit.

Monday's arrangement, should it last, is something of a coup for Burberry since Mr. Bailey--who has been with the company since 2001--is widely known as being the face of the brand and losing him entirely would have been a significant blow for the British trench coat maker.

Write to Saabira Chaudhuri at [e-mail]

(END) Dow Jones Newswires

July 11, 2016 09:55 ET (13:55 GMT)

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