Yahoo Finance Burberry faces takeover threat after failed succession plan for Gobbetti
Marco Gobbetti’s reign at Burberry came straight out of the luxury goods playbook: forget about us ordinary folks and ruthlessly target the super-rich.
Just as Lawrence Stroll is doing in his turnaround of Aston Martin, Gobbetti took Burberry relentlessly upmarket, taking it towards the realms of Prada and Gucci on the fashionistas’ wish lists.
He and designer Riccardo Tisci — like him an ex-Givenchy honcho — brought rarity and exclusivity to the brand. They drove profit margins towards levels only the likes of LVMH and Kering usually reach. Margins were 15.4% when he arrived, and nearly 17% when he resigned
Covid was horrific, but the acute demand he stimulated for the Burberry label means sales are recovering far quicker than they would have, pre-Gobbetti.
But there’s a big “but”.
In his five years in charge, he’s also failed to do what a great CEO should do — leave the firm with strong, obvious, internal candidates to replace him.
He leaves his staff, shareholders and directors in a state of shock.
Now, the board has six months to find a successor.
Covid travel bans and the looming summer break (the fashion world largely disappears for the whole of August) will make that a struggle.
Questions about this failure of succession planning must also be asked of chairman Gerry Murphy. Did he know how itchy Gobbetti’s feet were? If not, why not?
Chairmen meet their CEOs on a regular basis. They’re paid to read people.
What happened here?
Britain’s most successful luxury brand is months away from being leaderless. Cash-rich private equity bidders will be watching.
Dangerous times.
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