Burberry Shares Surge as Celine CEO Gobbetti Takes Helm

Christopher Bailey cedes his CEO role, gaining the president title alongside his role as chief creative officer.
By Mariko Iwasaki ,

London-based luxury brand retailer Burberry (BURBY) , which has seen its shares plunge 25% over the past year, has announced a changing of the guards just two days before unveiling first-quarter results.

During afternoon trading, the fashion house said it appointed by Marco Gobbetti, who currently heads Paris-based brand Celine, as its new chief executive officer. He will assume the role "as soon as he is contractually able to do so" in 2017, according to the announcement. Gobbetti, who is also the chairman of LVMH's (LVMUY) Celine, has a track record of developing brands including Givenchy, Moschino, and Bottega Veneta, according to the announcement.

Burberry shares jumped, and recently traded up 5.9% at 1,231 pence.

Burberry, along with its peers, is struggling to cope in an industry that's expected to post a compound annual growth rate of just 2% to 3% in coming years. To address this -- and offset waning demand in China, its biggest market --the company announced an ambitious turnaround plan in May, designed to drive revenue growth, boost productivity and achieve at least £100 million in additional cost cuts by the 2019 fiscal year.

Following today's appointment, current CEO Christopher Bailey will become president and chief creative officer, and work in partnership with Gobbetti, the announcement said.  Bailey's existing dual role of CEO and chief creative officer had proved controversial in recent months, with some investors suggesting he was unable to juggle the two jobs.

"Marco brings incredible experience and skills in luxury and retail with him that will be invaluable to us," Bailey said in a statement.

Burberry also appointed Julie Brown as its  new operating and financial officer. Brown, currently CFO at medical technology firm Smith and Nephew, will join the business in early 2017, the announcement said.

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