LONDON — Jonathan Akeroyd may be coming home to Britain, but his new job as Burberry’s chief executive officer will be vastly different, and potentially more challenging, than any leadership role he’s held here, or in Continental Europe.
The markets believe he’s up to the job: equity analysts were upbeat about Akeroyd’s appointment, and Burberry’s share price closed up 2.3 percent at 18.73 pounds on Wednesday.
The 54-year-old executive has a strong track record at his current and previous employers — Versace, Alexander McQueen and Harrods — and tight relationships with past and present colleagues, including McQueen’s creative director Sarah Burton, and Donatella Versace.
He’s also a private equity darling, having been hand-picked for the Versace role by the brand’s former investor, The Blackstone Group. Akeroyd remained in the CEO role under new owners Capri, where he reported to John Idol, chairman and CEO of the American group.
Bernstein’s Luca Solca pointed to the “significant experience” that Akeroyd built while working for McQueen’s parent Kering, and for Capri.
“His experience seems relevant, as Burberry’s position in the market is somewhere in between the high-end European luxury brands and the more commercially focused American accessible luxury brands. We believe it is important that Burberry appoints a ‘merchant’ as CEO, an executive with strong commercial and marketing skills,” Solca said.
Solca also noted that Julie Brown, Burberry’s chief operating and financial officer, “provides a solid complement to Jonathan, with solid experience in cost control and finance.”
Barclays also mentioned Akeroyd’s “solid track record” and expects his appointment to succeed Marco Gobbetti, revealed Wednesday, to be well-received by the market.
Akeroyd has a host of soft skills, too: He knows how to handle big personalities, and crisis situations.
He cut his teeth at Harrods when the divisive, controversial Mohamed Al-Fayed owned the store, and shepherded his team at McQueen through the difficult period following the suicide of Lee Alexander McQueen in 2010.
Even with that background — and those personal skills — the Burberry job will test Akeroyd’s mettle.
Unlike most luxury goods brands, Burberry is 100 percent quoted on the stock exchange, and is always susceptible to a takeover. There is no single shareholder or publicly quoted parent to mask a bad quarter or an unsuccessful turnaround strategy.
Then there is the relentless rhythm of quarterly reporting to the markets, and to the British press, which is quick to pounce on the slightest misstep, or misspoken word.
The inevitable swings in the Burberry share price have no doubt caused midnight palpitations in the hearts of many of its CEOs. Akeroyd’s income, like those of his predecessors, are now bound very publicly to the movement of those Burberry shares, and he will be measured on how much the price rises — or falls — during his tenure.
According to Burberry, Akeroyd will earn an annual salary of 1.1 million pounds, with an annual cash benefits allowance of 50,000 pounds. He will also be eligible for a target bonus ranging between 100 percent and 200 percent of his salary, and a Burberry Share Plan award amounting to 162.5 percent of his salary.
He’ll be granted cash and share awards to compensate for incentives from the publicly quoted Capri Holdings that he’ll forfeit upon joining Burberry. The aggregate value of those buyout awards is about 6 million pounds.
While the pressure is on, Akeroyd’s job at Burberry will feel familiar to what he was already doing at Versace. When the British executive moves into Burberry’s riverside headquarters in April, he’ll be expected to continue the brand upgrade his predecessor Gobbetti began — and keep up the sales momentum that has only just begun to build at the British brand, post-pandemic.
Under Gobbetti, Burberry began behaving more like a luxury brand: The outgoing CEO — who’s exiting to join Salvatore Ferragamo in his native Italy — culled the wholesale client list, put the focus on full-price sales, did away with markdowns and took ownership of the leather goods business.
He shifted into top gear on the social media front, opening a social selling store with Tencent and put Burberry accessories on the map, broadening and enriching the offer, creating handbag families and a pricing architecture similar to those at other luxury goods brands.
Over the summer, Gobbetti also opened a new concept store at 1 Sloane Street between Harrods and Harvey Nichols. Burberry nabbed the key corner site overlooking Brompton Road and Sloane Street, and was the first tenant to occupy one of seven planned flagships.
But when he revealed he was leaving, Gobbetti was only part-way through his brand upgrade strategy. In addition, Burberry currently trades at a significantly lower multiple compared to its fashion luxury peers, and Gobbetti has admitted there is still much work to be done.
Gobbetti also propelled Burberry through the COVID-19 crisis, and is handing over a company that’s in good shape.
As reported, first-quarter retail revenue surged 86 percent to 479 million pounds, fueled by continued strong growth in mainland China, South Korea and the Americas. At constant exchange, retail revenue rose 98 percent in the three months to June 26.
Comparable-store sales rose 90 percent compared with the first quarter of last year, and climbed 1 percent compared with pre-pandemic levels in 2019. Full-price comparable store sales jumped 121 percent compared with last year, and 26 percent compared to pre-pandemic levels.
Burberry has even reinstated its dividend to 2019 levels, and said it plans to reintroduce a mid-year dividend in November. Sales growth is set to be in the “high single-digits” in fiscal 2021-22.
Similarly, Akeroyd has been leveling up the offer at Versace.
In an interview in 2018, Akeroyd told WWD that he helped to shift the Italian brand toward a retail culture, ramp up productivity, elevate the brand message with more storytelling, and simply “be more Versace. We all felt we should embrace the DNA and bring out the codes in a better way,” he said.
Like Gobbetti, Akeroyd also worked hard at adding value: he cleaned up and repositioned the wholesale network in line with his “elevation mission,” and put a strong focus on retail.
At Burberry, Akeroyd is also expected to get on well with chief creative officer Riccardo Tisci, whom he got to know during all those months of chatter when the designer was tipped to be joining Versace.
That deal never materialized, but now the two will finally have their chance to bond: Tisci confirmed last month that he plans to remain at Burberry and is said to have warmly welcomed Akeroyd’s appointment this week.
“I’m staying at Burberry — of course I am. I am young, I still have a lot to do. I’m not leaving,” Tisci told WWD last month. He admitted that “it hasn’t been an easy time,” with the pandemic and the lockdowns, “but things are changing quickly, and I’m very happy here, with the way the collections and the shows are going.”
On Wednesday, Akeroyd said he has long admired Burberry, and has “a deep affection for its storied heritage. I am looking forward to returning to London, where I first built my career in the luxury industry, to join a talented team with ambitious plans for the future and a strong platform to accelerate growth.”
Time is on his side: Akeroyd doesn’t join Burberry for another six months. In the meantime, Gobbetti, who leaves at the end of the year, and Burberry’s chair Gerry Murphy will be running the company. The next round of quarterly results is set for Nov. 11 and they’re expected to show further growth, reflecting the impact of more physical store reopenings and loosening restrictions on international travel.
Now it’s up to Akeroyd to maintain that momentum.