May 6, 2016
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Burberry allegedly considering senior manager appointment

May 6, 2016

Burberry, the British fashion brand that has successfully combined heritage style with a focus on online initiatives and contemporary marketing, could be set to appoint a new senior manager to support chief creative director and CEO Christopher Bailey.

According to the Financial Times, the move comes as investors are troubled by disappointing trading, as well as a sharp decline in Burberry's share price. Sources told the newspaper that news of a senior executive appointment may come after Bailey unveils the results of a business review alongside Burberry’s preliminary results later this month.

A number of investors have advocated for stronger leadership at the company after a forecast of weaker than expected profits this year. Shares have declined by 21% since Bailey took over as CEO in May 2014, and some investors have criticized Chairman Sir John Peace's decision to appointing Bailey to the dual roles.

Former CEO Angela Ahrendts left Burberry to run retail and online stores at Apple. A Burberry shareholder, who has sold down Burberry shares in the past year, told the FT: “Bailey needs back-up. He needs someone to help him on the marketing and retail side, who has a good understanding of the business and knows exactly where they want to take the company.”

Another investor said: “It worked with Christopher Bailey as head of design and Angela Ahrendts as chief executive, but there have been problems since he took up both roles after she left. It is time for Sir John to move — it was his decision to give Bailey the twin role, so doubts over Bailey mean there are doubts over Sir John, too.”

Burberry as a company is vulnerable to changes in the global economy, as Chinese consumers account for 40% of the group’s sales — higher than the industry average of 33%. The brand has been hit hard by the fall in Chinese visitors to Hong Kong.

One top 20 shareholder said of Bailey's dual role: “There was a feeling in the City at the time of his appointment that it did not make sense to promote the fashion and design person to CEO as well. Is it coincidence that, since his appointment, the shares have dropped sharply? I think it is unfair to pin the blame on Bailey for this, but it does raise the questions over whether he should have been given the dual role in a way that it would not, if the company was going great guns.”

Last month the company appointed a Chief Information Officer and also created a new position of Chief People and Corporate Affairs Officer. Burberry declined to comment on the Financial Times' story.

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