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Double Dipping at Burberry

In one of the year’s most unorthodox moves, the company handed its chief creative officer, Christopher Bailey, the additional job of chief executive officer.

What was Burberry thinking?

This story first appeared in the December 16, 2013 issue of WWD.  Subscribe Today.

In one of the year’s most unorthodox moves — at least to the world outside the walls of brand headquarters Horseferry House — the company handed its chief creative officer, Christopher Bailey, the additional job of chief executive officer, succeeding Angela Ahrendts, who is leaving to join Apple next year.

The choice of having the designer fill both roles is unusual for a publicly listed fashion and luxury firm, and especially one that’s in the FTSE 100. Markets were puzzled, and Burberry’s announcement sent the company’s share price down nearly 9 percent.

To the folks at Burberry, however, anointing Bailey was business as usual. “I would never, ever, ever have considered leaving if I didn’t know that the company was significantly outperforming, and if I was not sure that Mr. Bailey was ready to take the baton,” said Ahrendts last month after Burberry reported a 32.6 percent spike in first-half net profits to 112.7 million pounds, or $173.6 million. “He has already been overseeing half of the business. In addition to the collections, all the store design, creative media and everything the consumer sees has gone through his office for the last eight years.”

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Bailey and Ahrendts were a close-knit team — the two had already worked together at Donna Karan in New York — and had a rare professional relationship similar to that of Tom Ford and Domenico De Sole when they were running Gucci and, later, Gucci Group.

When the news first broke, Burberry took pains to convince observers that Bailey’s appointment was in the cards.

“Christopher has always been the board’s preferred successor [to Ahrendts], and there was no doubt in the board’s mind that Christopher is the right person to unlock the next phase of Burberry growth. It was a very measured, thought-through plan,” said Carol Fairweather, the company’s chief financial officer.

While there’s no shortage of goodwill for Bailey, observers are reserving judgment. “Ninety-nine times out of a hundred, if you combine the roles of head of design and ceo, you are definitely asking for trouble,” said George Wallace, chief executive officer of MHE Retail consultants. “But Christopher Bailey is no ordinary head of design: He is a highly accomplished designer with a really good commercial sense and he is capable of doing either one of those jobs. My worry is that it will be a superhuman task to do them both.”

Last month, Bailey sought to answer that question in his address to analysts following the profit statement. He revealed the promotion of his longtime right-hand man, Luc Goidadin, to the new position of chief design officer, said his Burberry would have a more “distilled” structure and that he would have fewer direct reports than his predecessor.

Wallace said it’s clear the people running Burberry are neither crazy nor stupid. “They are aware of all the issues. And I think things will depend on what the details of Christopher’s design involvement will be.” Wallace said the new setup will work, “as long as he’s not slaving over the drawing board.”

Following the initial announcement, De Sole, who is now chairman of Tom Ford International but knows Bailey from when the designer worked with Ford at Gucci, said he believes Bailey can play the two roles. “Christopher is terrific, and if he has strong operational and financial support around him, he can do both jobs.”