Luxury Goods Oust Executives With Global Economy in Flux
Luxury-goods makers are spring cleaning their boardrooms and ateliers.
At least 14 new presidents, chief executive officers, chief financial officers and creative directors started at European companies, including Mulberry Group Plc (MUL) and PPR SA (PP) in the first quarter alone.
“Companies are reorganizing for the next growth cycle,” said Giovanna Brambilla, a partner at Value Search Srl in Milan. “If they’re not convinced of having the best leaders, they’re changing generals.”
Luxury companies are seeking new talent and ideas as they contend with a slowing economy in China and a cut in high-end spending by Europeans. An increasing dependence on emerging markets and the Internet are stoking demand for executives with broader skills, according to Michael Boroian, president of recruiter Sterling International in Paris. He anticipates more changes this year.
LVMH Moet Hennessy Louis Vuitton SA (MC), the world’s largest luxury-goods maker, hired Sebastian Suhl as CEO of its Givenchy fashion and leather goods brand in March. He is credited with driving competitor Prada Group’s expansion in the Asia Pacific region in his six and a half years with the Milan-based company, latterly as chief operating officer.
Suhl has “a great feel for product and product development, he knows all the international markets and he works exceedingly well with creative talents,” Boroian said. His appointment “is very typical of what you’re seeing. People evolve and those rising stars who are all in their late 30s to early 50s are now seeing their talents being parlayed.”
Sales of high-end goods may climb 10 percent in 2012, half last year’s rate, and 9 percent in 2013, according to HSBC analyst Antoine Belge. China, which accounted for 10 percent of 2011 sales, will provide a third of this year’s increase as growth slows in Europe, he estimates.
Most appointments have come from within the industry and some from within the same company. Mulberry, the Somerset, England-based maker of 595-pound ($944) Cookie Lily leather handbags, poached Bruno Guillon from Hermes International SCA (RMS) to be CEO, while LVMH shuffled at least four executives, including moving Michael Burke from Fendi to head up Bulgari, which it bought for about 3.7 billion euros ($4.8 billion) last year.
In other cases, industry experience hasn’t proved necessary. PPR, the Paris-based owner of Gucci, hired Jean-Marc Duplaix as CFO from broadcaster M6 Group in January. LVMH raided Danone SA (BN), the world’s biggest yogurt maker, for the next CEO of its Vuitton fashion and accessories brand: Jordi Constans joined in September and will succeed current CEO Yves Carcelle from 2013.
“The only criterion that guided us was of course to find the best possible manager for the job,” LVMH Chairman and CEO Bernard Arnault said in February.
That could mean future CEOs come from the entertainment and media industries as the Internet makes managing and engaging an audience increasingly important, according to Floriane de Saint Pierre, founder and president of a Paris-based recruitment firm bearing her name. “We are on the edge of luxury brands becoming media companies,” she said.
No such radical step is on the horizon when it comes to designing the clothes and accessories. The world of creative directors “is often a bit of a club,” said Brambilla.
Raf Simons joined Christian Dior Couture this week as artistic director from Jil Sander, where he was replaced as creative director by the fashion label’s namesake founder in February. PPR reappointed Hedi Slimane as creative director of Yves Saint Laurent in March, succeeding Stefano Pilati. Slimane had previously worked at YSL from 1996 to 2001.
Major brands aren’t prepared to take risks with unproven designers given the budgets involved and the impact the collections have on a brand’s image, said Patricia Lindo, managing director of London-based recruiter Style Incorporated.
“They’re too big a beast to bring in someone fresh and young unless they’ve worked with the creative before and grown up through the ranks,” she said, citing Sarah Burton, creative director at PPR’s Alexander McQueen label, as an example of in- house talent that has been promoted to the top. “It’s such a risk to bring in someone who hasn’t had that track record.”
Other changes this year include Pietro Beccari, a former executive vice president of marketing and communications at Louis Vuitton, as Fendi CEO; Nicolas Abboud as CEO of jeweler De Grisogono; Renaud de Lesquen as president of Dior in China; Giovanni Zoppas as CEO and general manager of eyewear maker Marcolin; and Lucy Yeomans as editor-in-chief at Net-a-Porter, an online unit of Cie. Financiere Richemont SA. (CFR)
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