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PARIS — Michael Burke, the architect of Fendi’s impressive growth trajectory, will soon trade furs for jewels.
This story first appeared in the December 12, 2011 issue of WWD. Subscribe Today.
According to market sources, the executive is to take up the management helm at Bulgari SpA, which Fendi parent LVMH Moët Hennessy Louis Vuitton acquired earlier this year in one of the largest luxury deals of the year — and the largest in LVMH history.
The French luxury giant paid a premium for a majority stake in the Rome-based jeweler — the cash-and-share swap value estimated at more than $6 billion — and is eager to set it on a path to greater heights.
Burke could not be reached for comment, while LVMH declined comment.
An announcement could come as early as this week.
At Fendi, Burke has proven he is able to immerse himself deeply into the culture of a brand and build strong business pillars.
Since his arrival in 2003, Burke put furs and leather goods at the center of Fendi’s development; created a palazzo in Rome to exalt the brand and its two creative engines, Karl Lagerfeld and Silvia Fendi; raised the bar with event marketing with spectacles such as a 2007 fashion show on the Great Wall of China, and put craftsmanship back on the consumer agenda through in-store demonstrations and an ongoing link with industrial designers.
Market sources estimate Fendi generates annual revenues of about 600 million euros, or $802.9 million at current exchange rates, and is the second most profitable brand in LVMH’s fashion and leather goods division after cash cow Vuitton. It is understood the brand remained highly profitable even through the 2009 global financial crisis.
An affable and articulate executive, Burke has also proven adept at transforming Fendi from a family-owned enterprise with complicated dynamics into a taut and professionally run luxury player — a skill set that should serve him in good stead at Bulgari, founded in Italy in 1884.
When LVMH unveiled the Bulgari deal in March, it said incumbent Francesco Trapani would remain ceo in the short term to assist in the transition, but that a new leader would be put in place. As part of the deal, which made the Bulgari family the second-largest shareholders in LVMH, Trapani took the management helm of the French group’s watch and jewelry business, of which Bulgari is the largest property with 2010 revenues of 1.07 billion euros, or $1.41 billion at average exchange. Trapani also joined the executive committee of LVMH.
Hard-hit by the economic crisis, Bulgari swung back to profitability in 2010. Jewelry, the group’s core business, rose 21.4 percent to 488.4 million euros, or $644.7 million. Watches gained 1.3 percent, reaching sales of 214.9 million euros, or $283.6 million. Accessories grew 34.7 percent during the year, while perfumes, Bulgari’s second-largest category, rose 12 percent, as reported.
In the first half of 2011, Bulgari credited surging sales in all categories and markets for a return to the black in the first half with a net profit of 9.1 million euros, or $13.2 million, compared with a loss of 7.7 million euros, or $9.4 million, in the same period last year.
Meanwhile, it is understood Burke’s successor at Fendi has already been lined up, and comes from within LVMH: Pietro Beccari, executive vice president, marketing and communications at Louis Vuitton.
Both men are expected to take up their new positions early next year.
Beccari, who quietly joined Vuitton from German consumer products group Henkel in 2006, was seen as a rising star at the leather goods powerhouse. He forged strong ties with Vuitton chief executive officer Yves Carcelle and Antoine Arnault, the son of LVMH chairman Bernard Arnault, who had been Vuitton’s director of communications.
However, Carcelle is to step down from Vuitton at the end of 2012, relinquishing the post to Danone executive Jordi Constans, and Antoine Arnault is now helming men’s luxury shoe firm Berluti, with Beccari as Berluti’s president.
According to sources, Beccari asked for mobility within the group once Constans was named.
An Italian national, Beccari is an outgoing, indefatigable type in the mold of Carcelle. During his tenure at Vuitton, he united marketing and communications functions, spearheaded improvements in its ready-to-wear unit and oversaw product collaborations with musician Kanye West and the estate of Stephen Sprouse.
Communications efforts — from museum exhibitions to lavish events — trumpeted Vuitton’s travel roots and craftsmanship as a foil to fashion-driven advertising.
Burke has had a long career at LVMH, and is considered a protégé of Bernard Arnault. A French national, Burke started his career with the French business titan in 1980, working at various Arnault holdings before joining Christian Dior in the U.S., ultimately rising to president.
He was president of Louis Vuitton North America for four years before returning to Paris in 1997 as Dior’s executive vice president. He was elevated to the number-two spot at Dior, under ceo Sidney Toledano, in 1998.
LVMH and Prada swooped in and jointly bought a majority stake in Fendi in 1999 at the height of the luxury acquisitions boom and “It” bag craze. LVMH assumed sole control in 2001 and has gradually bought out all remaining family shareholders.
Besides streamlining manufacturing and eliminating gray market goods, Burke won the trust and engagement of Lagerfeld, who has had a design role at Fendi since the Sixties but who had been vocal about what he saw as missteps by the firm. Burke then engineered an upscaling drive, weaning Fendi from what had been an overreliance on its double-F logo, and ramping up sales of five- and six-figure furs and luxurious handbags like the Peekaboo.
Beccari will inherit a strong company with a full slate of development plans, including important “palazzo” flagships opening next year in London, Paris and Hong Kong. The brand has about 200 directly operated boutiques and shop-in-shops.