In a sudden turn of events, Burberry’s CEO Marco Gobbetti has decided to leave the British heritage label for Florence-based Salvatore Ferragamo after merely a four-year stint.
In a statement released by Burberry, Gobbetti has taken up the role of general director and CEO at Ferragamo and this opportunity “will enable him to return to Italy and be close to his family.” Being away from his native Italy for more than two decades and compounded with the current woes of the pandemic, it’s no surprise that he wants to relocate back.
Gobbetti took up the top executive position back in 2017 from his predecessor Christopher Bailey, who was Burberry’s CEO and chief creative officer. With over a decade of experience spanning different Houses such as Moschino, Givenchy and Celine, the luxury veteran had envisioned a five-year plan to revitalise the British brand where it will become a powerhouse comparable to competitors such as Gucci, Dior and Louis Vuitton.
Since Gobbetti took over, Burberry’s share price has risen 37% but after the announcement of his leaving on June 28 the shares have fallen and it is trading around 25% higher than in July 2017. During his tenure at the brand, he brought in Riccardo Tisci to be the chief creative officer, increased prices, strengthened control over distribution and scaled back on wholesale partnerships in favour of higher-margin direct sales.
Being one of the early adopters of utilising the digital space to attract new customers, Burberry under Gobbetti managed to reap “strong double-digit” growth in China, which is the key market driver for luxury sales during this pandemic and the foreseeable future. Furthermore, he expanded Burberry’s accessory selections by creating handbag families and following pricing strategies similar to that of other luxury brands. The aim is to make the brand a “centre of excellence” for leather goods. In that regard, Burberry’s market capitalisation rose roughly by a third since Gobbetti took over in 2017.
“The board and I are naturally disappointed by Marco’s decision, but we understand and fully respect his desire to return to Italy after nearly 20 years abroad. With the execution of our strategy on track and our outlook unchanged, we are determined to build on Burberry’s strong foundations to accelerate growth and deliver further value for our shareholders,” said Burberry’s chairman Gerry Murphy. Acknowledging Gobbetti’s “immense contribution”, Murphy further added that the outgoing CEO has had “a transformative impact, establishing a clearly defined purpose and strategy, an outstanding team and strong brand momentum.”
The search is on to look for Gobbetti’s replacement and there are also speculations that Ticsi could also be leaving and possibly join Ferragamo as its creative director after Paul Andrew left last month. “The key aspect of Gobbetti and Tisci’s mission at Burberry was focused on leather goods, however, we note that they also had quite a lot of success with shoes (especially in the U.S.), which is also a core product category for Ferragamo,” investment company Exane noted.
Gobbetti will be Ferragamo’s fourth CEO in five years and according to Marco Baccaglio, equity research analyst at Kepler Cheuvreux, the decision to hire the new incumbent was a surprise and since Gobbetti is to join only after serving his contractual obligations, it delays the “engineering and the execution of a new plan to revive the brand.”
For Gobbetti, his new role at Ferragamo presents another challenge for the brand, which has been suffering from lacklustre sales performance over the years and the pandemic has only worsened the situation. For the year 2020, Business of Fashion notes that the brand’s revenue dropped by 33% to €916 million. Losses before interest and taxes were €62 million last year, compared to €150 million profit in 2019 — this represents the company’s first year of losses since it went public on the Milan stock exchange in 2011.
In a concluding statement by Berstein’s Luca Solca: “Burberry is in a far better position today than when Marco took responsibility for it. Yet, the magnitude of the issues at hand didn’t offer a chance for the runway success that some had hoped for.” It remains to be seen how this new arrangement will pan for these two heritage companies.