LONDON — His remarks were brief, but telling.
Burberry’s new chief executive officer Marco Gobbetti addressed shareholders for the first time at the company’s annual general meeting here Thursday, and while he didn’t speak for long, he made it clear why he took the job, what his plans are for the next few months – and his vision.
“Christopher is one of the reasons I came to this company,” said Gobbetti, referring to his predecessor Christopher Bailey, who remains chief creative officer and has taken on the new title of president.
“Of course we each have our own responsibilities, but the dialogue is constant. We have a great understanding, we share the same vision, the same values. We meet when we need to meet, sometimes twice a day, sometimes once a week,” Gobbetti added on the sidelines of the meeting that took place at the Park Lane InterContinental. “We’ve done this work for a while, so we know how to talk” to each other.
Gobbetti’s appointment was announced last year, and he joined the company in January as executive chairman for Asia Pacific and Middle East. The company has also hired Julie Brown in the new joint role of chief operating officer and chief financial officer, and the three are expected to work as partners, said Burberry’s chairman Sir John Peace.
Gobbetti took over as ceo last week, and during the meeting told the 100 or so shareholders present that Burberry “must evolve and try new things. We have to experiment, to create. We have to ask ourselves tough questions, and be bold in all areas of the business in order to create a new energy and positivity,” for long-lasting growth.
He said his first task is to listen to shareholders and customers and to meet the teams worldwide in order to understand their strengths. He’s already made a trip to the U.S., where Burberry has been repositioning the brand, and will be in New York once again later this month for more meetings.
Gobbetti, a seasoned leader, had been ceo at Céline since 2008, arriving in tandem with creative director Phoebe Philo and engineering a swift rejuvenation and overhaul of the brand. Prior to Céline, he’d orchestrated a turnaround at Givenchy, recruiting then unknown Italian designer Riccardo Tisci as its new couturier.
Bailey said once again he plans to “redouble” his focus on design and on the brand, and said the job of reshaping Burberry for the next generation has “only just begun.”
As reported, profits for fiscal 2016-17, which ended on March 31, fell 7.3 percent to 286.8 million pounds, in line with analysts’ expectations, while revenue was down 10.4 percent on a reported basis and 2 percent on an underlying one to 2.77 billion pounds. Earlier this week, Burberry reported a 4 percent uptick in like-for-like sales in the first quarter of the current year.
Bailey took on the ceo role in 2014 while remaining chief creative officer — and his tenure was chequered. It was a time when demand for luxury goods began to slow, and Burberry saw its sales shrink and share price fall. Bailey, like many fashion and luxury leaders, was forced to put an austerity and restructuring plan into action.
As a result, the company has been shaving millions of pounds off its cost base, rationalizing its back office and supply chain, and putting a renewed focus on digital sales and the local consumer as tourism ebbs.
The company said it’s on track to deliver at least 100 million pounds in annualized savings by fiscal 2018-19. For the past two years Bailey has given up millions in bonus payments, and on Thursday shareholders were asked to vote on a new and more austere remuneration policy for Burberry executives.
The brand has also consolidated three labels into a single Burberry one; shifted to a see-now, buy-now model; slashed the number of products it offers; and mothballed new store openings in a bid to make its current spaces work as hard as possible.
Over the past few years it has also unpicked a variety of strategies put in place by Bailey’s predecessor Angela Ahrendts, who had presided over Burberry in the good times. Earlier this year Burberry inked a license with Coty Inc. after having trumpeted its original decision, under Ahrendts, to take its beauty business in-house in line with companies such as Chanel and LVMH Moët Hennessy Louis Vuitton.
On Thursday the company’s shareholders fell into line, voting in favor of all 22 resolutions put to them. There was only one question, from an independent shareholder, about remuneration.
Earlier this month, shareholder lobby groups had voiced concerns that the share payout schemes handed to Bailey in 2014, and to Brown were too high. Brown later waived a portion of her buyout award, and 75 percent of her 2016/17 earnings per share award.
Resolution three, the remuneration report that referred to past pay policies, received a vote of 68.5 percent in favor, while resolution two, which sets out a new and more stringent pay policy, received a vote of 93.4 percent in favor. Burberry said it took proactive measures to address concerns past and future remuneration over the past year and in the weeks leading up to the AGM.
Following the meeting, Peace said the board has worked to ensure that Burberry’s pay schemes are competitive and the company consistently benchmarks itself against its competitors with regard to remuneration. “My duty as chairman of Burberry is to do what I think is right for the company and right for shareholders. Not all shareholders are always going to agree, but my job is to work with the board to do what we think is right in the longer term.”
Peace is coming to the end of his tenure at Burberry. As reported, board member Jeremy Darroch has been appointed as senior independent director with effect from July 1, and will lead the process of appointing a successor to Peace. Burberry is expected to name his replacement by the end of 2018.