Christopher Bailey's position as CEO and creative director of Burberry always looked as unwearable as one of the fashion label's lace shirts.
But the company's decision on Monday to strip Bailey of his CEO role and give it to Marco Gobbetti, head of Celine, looks even more impracticable. That didn't stop the shares jumping as much as 7.2 percent on the news. But there are good reasons to think that ebullience may be short-lived.
Burberry's problem has never been the company's strategy or the management of its shops -- it was the clothes and accessories, both of which look tired. As demand from China wanes, Burberry needs to appeal to the British customers it neglected and revive its style credentials. The brand needs new creative blood and it's unlikely to get it with this arrangement.
Gobbetti is, to be fair, an industry veteran who's worked previously at Givenchy and Bottega Veneta. He helped propel French luxury fashion house Celine from classic to cutting edge. Parent LVMH doesn't split out the business's performance in its accounts, but has said it's been enjoying strong momentum. Even so, it will be hard to stamp his direction on Burberry with Bailey still in place.
The hope is that Bailey's effective demotion will pave the way for a further overhaul of the creative role. Burberry needs revamp as big as Gucci's when it hired Alessandro Michele as creative director, and made loafers fashionable again.
Such reinvention is even more imperative as Burberry's Chinese customers -- accounting for about 40 percent of its retail sales -- rein in spending, and luxury markets across the world show signs of slowing.
That change is unlikely in the short term, especially given other executives are moving round at Burberry. Finance director Carol Fairweather is stepping down, to be replaced with Julie Brown, who holds the same job at medical equipment company Smith & Nephew.
Burberry shares are still down by almost 25 percent over the past year, making it one of the worst performers in Bloomberg Intelligence's luxury peer group. To have any chance of reversing that slide, investors need to push for Burberry's creative direction to be reinvigorated, too. And that, ultimately, means Bailey relinquishing that role. The latest arrangement looks like an ill-conceived garment that won't serve shareholders well.
This column does not necessarily reflect the opinion of Bloomberg LP and its owners.
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