Apple Retail Chief Plans to Step Down -- WSJ

By Tripp Mickle and Robert McMillan 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (February 6, 2019).

Apple Inc. said that its retail chief, Angela Ahrendts, is leaving the company and will be succeeded by a longtime operations executive who now runs human resources, a move that comes as the tech giant wrestles with flagging iPhone sales.

Ms. Ahrendts, one of Apple's most highly paid executives and most prominent female leaders, joined the company in 2014 from fashion house Burberry Group PLC and was charged with revamping Apple's stores and improving employee morale.

During Apple's most profitable run, Ms. Ahrendts presided over a sizable retail expansion that punctuated the company's luxury-brand appeal and, more recently, close observers say she was a capable caretaker of Apple's successful retail strategy but that little changed radically under her tenure.

"She doesn't seem to have given the retail experience any forward-leaning point of view," said Mark Cohen, director of retail studies at Columbia Business School. "Though they made some noise about creating a community center out of the store, I don't think that had any traction."

Ms. Ahrendts had enjoyed the support of Apple's board over the years and had been viewed as a potential successor to Chief Executive Tim Cook, people close to the board said.

Apple doesn't disclose its store sales, but the company's wider business has faced pressure from investors to reignite iPhone sales, which have been disappointing. The company's iPhones sales declined 15% to $51.98 billion during the three months ended in December, the company's biggest sales period. In January, Mr. Cook expressed disappointment about a decline in customers visiting Apple Stores in China as the economy has slowed there.

Ms. Ahrendts, 58 years old, will be leaving Apple in April, the company said Tuesday, "for new personal and professional pursuits." Ms. Ahrendts plans to travel with her husband, according to a person familiar with her thinking.

Succeeding her is Deirdre O'Brien, the company's vice president of people who has been at Apple since 1998. Although Ms. O'Brien is in charge of the company's human-resources functions, the longtime Apple executive has also handled roles that dovetail with her new retail position, including demand forecasting.

Ms. O'Brien will now be tasked with running Apple's more than 500 stores on five continents and several online sales channels. She will continue to oversee human resources, talent development and employee relations and will focus "on the connection between the customer and the people and processes that serve them," Apple said.

"The last five years have been the most stimulating, challenging and fulfilling of my career," Ms. Ahrendts said in a statement. "Through the teams' collective efforts, Retail has never been stronger or better positioned to make an even greater contribution for Apple."

Apple hired Ms. Ahrendts in October 2013 after a yearlong search, from her job as chief executive at British luxury-goods company Burberry. During her tenure there since 2006, Ms. Ahrendts more than tripled sales and quadrupled the company's share price. She was known for having refreshed Burberry's image with subtler designs and more understated offerings, after the brand's famous beige, black and red plaid had become a bit frayed from overexposure.

Ms. Ahrendts, an Indiana native, broke ground as one of the few women in Apple's executive ranks.

At the time of her hiring, Apple's stores were seen as stale, and other retailers were copying its format of brightly lighted open-plan places. In 2013, sales at Apple stores had fallen, year over year, in the June quarter for the first time in four years. Apple no longer breaks down its retail business in its financial reports, but in 2012 retail sales accounted for 12% of total revenue.

Leveraging her fashion-industry experience, Ms. Ahrendts oversaw an expansion of Apple's retail business that increasingly thrust Apple stores into prestigious locations in the world's fashion capitals, including the Champs-Élysées in Paris and Piazza del Liberty in Milan.

Ms. Ahrendts pushed for flagship stores in Seoul, Thailand and other locales outside North American and European markets. She also championed the idea of refashioning Apple stores as "town squares," gathering places in local communities where people could work with Apple's staff to learn how to better use their iPhones, iPads, Macs and other products.

Ms. Ahrendts is among the highest-paid executives in the retail industry, earning more last year than the heads of many retail chains. She received $26.5 million in total compensation last year from Apple, which included a $21.5 million stock award -- nearly twice as much as Mr. Cook. Doug McMillon, CEO of Walmart Inc., received $22.8 million last year in total compensation. A Wall Street Journal analysis of CEO pay last year found the median pay for retailing CEOs in the S&P 500 was about $10 million.

During her tenure at Apple, Ms. Ahrendts's compensation totaled $172.8 million, including stock awards, according to company proxy statements. After joining the firm she was granted a signing bonus of more than 113,000 units of restricted stock, then valued at about $68 million.

Because of their high-profile locations and role as product-demonstration spaces, Apple's stores have an outsize effect on the company's bottom line, said Toni Sacconaghi, an analyst with Sanford C. Bernstein & Co. "It's more important than the revenue would indicate."

Ms. Ahrendts leaves as a time when Apple users can no longer simply make an impromptu visit to the Genius Bar, the company's in-house tech support. Long waits for appointments at Apple Stores have become a fact of life for many urban customers, an apparently worsening issue for Apple's retail strategy, said Neil Cybart, founder of Above Avalon.

Ms. O'Brien has long been a trusted lieutenant for Mr. Cook. She played a key operations role in the launch of every Apple hardware product over the past 20 years before being tapped to lead human resources in 2017.

--Suzanne Kapner and Patrick Thomas contributed to this article.

Write to Tripp Mickle at [e-mail] and Robert McMillan at [e-mail]

(END) Dow Jones Newswires

February 06, 2019 02:47 ET (07:47 GMT)

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