© Reuters. A man walks past a store of luxury brand Burberry at a shopping mall in Beijing, China March 26, 2021. REUTERS/Tingshu Wang/Files
By Muvija M and Claudia Cristoferi
(Reuters) – Burberry boss Marco Gobbetti is leaving the company to return home and take the helm of Italian luxury goods group Ferragamo, casting a pall over the British fashion brand’s revamp.
Gobbetti has been credited with boosting Burberry’s market value by a third as he has taken the brand further upmarket. Concern that his departure will undo some of that progress sent the company’s London-listed shares tumbling as much as 10% in early trade while Ferragamo rose 2.3% in Milan.
Burberry recovered some of its losses to trade down 6.4% at 21.08 pounds while Ferragamo pared gains to stand 0.1% up at 19.32 euros.
“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,” Burberry Chairman Gerry Murphy said in a statement.
Ferragamo, which became famous for shoes worn by Hollywood stars such as Audrey Hepburn, said Gobbetti would take up his new position as soon as he is released from his contractual obligations.
Burberry had earlier said that 62-year-old Gobbetti would be leaving at the end of the year to return to Italy, adding that it will now begin the search for his successor.
Known for its trench coats and trademark plaid, Burberry’s strategy shift under Gobbetti has injected fresh life into its ranges, helped by his 2018 recruitment of star designer Riccardo Tisci, a fellow Italian and former colleague at Givenchy.
“With Burberry re-energised and firmly set on a path to strong growth, I feel that now is the right time for me to step down,” Gobbetti said.
The market, however, appeared less confident in Burberry without Gobbetti.
“That (the share price reaction) shows how much he is credited with the success of the luxury goods business,” said Russ Mould, investment director at AJ Bell.
Speculation over a management shake-up at Ferragamo has been circulating for some time, even after the Ferragamo family that controls the company confirmed current boss Micaela Le Divelec in her role as recently as March.
In Gobbetti, it has hired an industry veteran who led luxury groups Celine, Givenchy and Moschino before joining Burberry. He took charge in mid-2017 from fashion designer Christopher Bailey, who spent only three years leading the company.
Burberry said in May that sales were recovering from the coronavirus crisis, partly thanks to a rebound in China, but cautioned that profit margins would be dented by higher investment.
Hargreaves analyst Sophie Lund-Yates had noted that Burberry was set to come out of the pandemic in better shape than it had entered the crisis, helped by positioning itself at the more exclusive end of the luxury chain.
Ferragamo, meanwhile, has been hit harder than most of its rivals during the pandemic and is often cited by industry observers as a possible takeover target, though the Ferragamo family has denied that it wants to sell the company.
Graphic: Burberry shares – https://fingfx.thomsonreuters.com/gfx/buzz/bdwvkodmlvm/Pasted%20image%201624869761452.png