LONDON – Christopher Bailey is poised to make his first major management appointment at Burberry – to fill the role left vacant by chief operating officer John Smith.
Until now, Bailey has been operating largely under the management structure he inherited from his predecessor Angela Ahrendts, but he’s under pressure to fashion a new Burberry, and the new appointee will speak volumes about where he’s taking the company.
Bailey, chief creative and chief executive officer, is looking into the possibility of creating a hybrid role and filling it with a retail expert who also has operational experience.
Asked Friday about how and when he plans to fill Smith’s role, Bailey declined to comment.
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During an event at Burberry’s Regent Street flagship store to mark the opening of London Collections: Men, Bailey reiterated what he told investors last month during his year-end results presentation. “Change is positive.”
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Sources said Smith’s resignation came as a surprise, and was not part of any planned layoffs. Smith said on Friday that he’s gunning for a ceo role.
“I am ready to embark on a new challenge. Having been the ceo of a fast growing international business in the past, I am exploring a number of exciting new leadership opportunities in that arena.”
From 2005 to 2012, Smith served as ceo of BBC Worldwide, the commercial subsidiary of the BBC that broadcasts to subscribers in more than 100 countries. He’d been at Burberry for a total of seven years.
Smith’s timing was certainly impeccable, and his departure dovetails with speculation that Bailey is set to hire someone who can support him in his day-to-day role as ceo.
As reported, both Stacey Cartwright, Burberry’s former chief financial officer, and now head of Harvey Nichols, and Gian Giacomo Ferraris, the former Versace chief executive, both denied to WWD that they are going to take up the potential role at Burberry.
Questioned by investors last month about a possible new appointment, Bailey said: “I balance my work with a phenomenal team of people,” adding he would offer up specifics in due course.
Following the announcement on Friday, Luca Solca, managing director at Exane BNP Paribas, mooted the creation of a retail/digital hybrid role.
“Clearly, Burberry needs to go through senior management adjustments, as the organization based on Christopher Bailey having a dual role does not seem ideal – and results are under pressure.
“John Smith retiring opens the opportunity for further changes in senior responsibilities. A most natural one would be for the future retail director to carry digital responsibility too,” Solca wrote in a flash report following the announcement.
Smith will leave Burberry and step down from the board by summer 2017, as per his notice period of 12 months.
His resignation comes just weeks after Burberry outlined a new strategy aimed at driving top and bottom line growth – and slashing costs – against a backdrop of eroding sales and profits.
Bailey’s plan includes tightening operations, downsizing the number of product lines, and shifting the focus from high-spending tourists to locals and to Burberry’s younger, digitally engaged fan base.
In September, Burberry will stage its first see-now, buy-now coed fashion show with both collections hitting the shop floor as soon as the curtain comes down.
Indeed, wholesale clients worldwide are signing non-disclosure agreements and buying the Burberry collections now – off digital images – or making showroom appointments in London to view and write orders.
“If this system works, it could be ideal for all of us and other brands would follow suit,” said one retailer who is writing orders this week.
Although Burberry is undergoing a radical restructure, Bailey did not announce any layoffs, although they may be in the pipeline: Chief financial officer Carol Fairweather said the company is still reviewing the way it works, and that will result in a headcount reduction over time.
In fiscal 2015-16 Smith was the second-highest paid manager, taking home more money last year than Fairweather.
Smith’s pay package in 2015-16 was 813,000 pounds, or $1.2 million, compared with the previous year’s 1.5 million pounds, or $2.4 million. Dollar figures have been converted at average exchange rates for the periods to which they refer.
Last year, like his counterparts in top management, Smith did not receive a bonus or performance-related shares.
Smith had served as a non-executive director on Burberry’s board since December 2009, and in 2013 was handpicked for the newly created post of chief operating officer by Ahrendts. She was keen on Burberry being considered a digital and media leader, as well as a luxury brand.
In Friday’s announcement, Bailey said Smith had made a “significant contribution” to Burberry. “I have personally valued and enjoyed John’s partnership and I would like to thank John for everything he has brought to Burberry.”
Smith said he’s “intensely enjoyed working for one of the world’s great luxury brands, and I am proud of my contribution to the company’s success over this period, particularly helping the company to be at the vanguard of digital and contributing to the growth of the beauty business. I am pleased to leave the company operationally stronger too.”