Burberry’s shares plummeted by almost 5% yesterday after its chief executive Angela Ahrendts shocked investors and the public by quitting the firm, despite a successful, seven-year tenure. Ahrendts will leave her post next year for tech giant Apple to run its retail stores, after playing an instrumental role in transforming Burberry’s fortunes.
The 53-year-old accelerated Burberry’s growth into a major global luxury brand rivalling Louis Vuitton and Gucci, while moving away from the negative “chavvy” image which was attached to its designs in the 1990s and early 2000s – a legacy of its popularity among Z-list celebrities and football hooligans. That transformation was underlined by a 17% surge in retail sales, totalling £694million between April and September this year, and total revenue of £1.03 billion, up 14%.
Significantly, Ahrendts was the highest-paid chief executive in the FTSE 100 last year, earning £16.9m. Her success was partly bolstered by a growing demand for Burberry in developing markets such as China and Indonesia, where the emerging middle classes look to the company’s products as must-haves. The great shock surrounding Ahrendts’ exit is largely the result of her emergence into the public consciousness over the past two or three years as the face (and brains) of Burberry. Her entrepreneurial flair in building the company during tough economic conditions has seen her become a regular figure in industry magazines and national publications, with many observers identifying her as closely with Burberry as Anna Wintour is with Vogue, or Steve Jobs with Apple.
Burberry Group has announced that its chief creative officer Christopher Bailey, who started there in 2001, will become its new chief executive. Meanwhile, Ahrendts will start as Apple’s new senior vice president for retail and online stores in mid-2014, where her experience in expanding Burberry’s retail presence in China will be key. Burberry has more than 70 stores in the country against Apple’s eight – a fact that is sure to have flashed up on the Apple board’s radar as it gears up to challenge rivals Samsung in the Far East.
Ahrendts will also be aiming to top the performance of former Dixons boss John Browett, who lasted just six months as Apple’s retail chief, admitting that he didn’t fit in with the company’s culture. As Apple CEO Tim Cook’s first major appointment, Browett made an error in looking to slash costs at its bricks-and-mortar operations by reducing new hires and cutting staff hours – moves that the firm uncharacteristically reversed. “The issue is I just didn’t fit with the way they ran the business,” Browett said. “It was one of those shocking things where you’re rejected from an organisation for fit rather than competency.”
Image of Burberry storefront courtesy of Annto / Shutterstock