What Happened: Burberry CEO Marco Gobbetti is crossing into enemy territory, announcing his new position as the CEO of luxury competitor Salvatore Ferragamo. According to Burberry, the move will allow him to “return to Italy and be closer to his family,” after spending 13 years at LVMH helming Givenchy and Céline and nearly the last five years turning Burberry into the fashion powerhouse it is today. “With Burberry re-energized and firmly set on a path to strong growth, I feel that now is the right time for me to step down,” Gobbetti said.
Gobbetti will remain at the London-based company until the end of the year, assuming his new role once released from contractual obligations. After his resignation made headlines on Monday, June 28, the trench coat maker’s share price tumbled as much as 10 percent in morning trading.
The Jing Take: Gobbetti has his work cut out for him. The struggling shoemaker took a significant hit during the pandemic, posting a net loss of more than $85 million in 2020, compared to a profit of $103 million the prior year. Although Ferragamo showed signs of recovery in the first quarter of 2021 — rising 13 percent to $298 million in revenues and recording a net loss of just $716,000 — turning sales around is just the start of Gobbetti’s to-do list. The Florence-based brand also saw its creative director, Paul Andrew, exit in May, leaving a hole for fresh energy and a more distinctive brand image.
This offers Gobbetti an opportunity to show what he’s got — to do for Ferragamo what he did for Burberry. In 2017, Burberry announced a plan to revitalize the brand, from refreshing its logo and creating the TB monogram, to transforming customer experiences and elevating price points. This vision was realized in China where, under Gobbetti’s leadership, the British label doubled down on innovation and localization to achieve triple-digit growth in Q4 2020 and Q1 2021. Over the last few years, Burberry has released a slew of successful (and some not-so successful) holiday campaigns, launched its first bespoke film, opened a social retail store in Shenzhen, and even experimented with gaming in the market, leading to expansion of the format globally.
Given this momentum, Gobbetti’s abrupt departure doesn’t look good for Burberry, which has yet to announce a successor. For one, there is still much work to be done; during his tenure, the company’s shares returned to 9 percent annually, still lagging behind bigger names like Prada and Hermès. Moreover, this news has left investors wondering whether Riccardo Tisci, who was hired by Gobbetti as chief creative officer in 2019, will also head out the door. But for Ferragamo, Gobbetti’s appointment could be just what the brand needs to stay independent, scale in China, and eventually gain a fighting chance against other luxury players.
The Jing Take reports on a piece of the leading news and presents our editorial team’s analysis of the key implications for the luxury industry. In the recurring column, we analyze everything from product drops and mergers to heated debate sprouting on Chinese social media.