Shares of the London-listed luxury fashion brand Burberry dropped Monday after it announced CEO Marco Gobbetti will quit at the end of the year to oversee Italian rival, Salvatore Ferragamo.
Burberry stock went as much as 8 percent lower Monday morning on the news, while shares of Ferragamo were little moved. Gobbetti previously oversaw European luxury brands including Céline and Givenchy before taking the reins at Burberry in 2017.
“The Board and I are understandably upset by Marco’s decision but we understand and totally appreciate his wish to return to Italy after nearly 20 years abroad,” Burberry’s chairman, Gerry Murphy, said in a statement. Gobbetti is credited for helping bring Burberry around by hiking pricing, appealing to younger buyers, and growing the company’s exposure in higher-margin categories like handbags.
Gobbetti engaged Italian designer Riccardo Tisci in 2018 to help modernize the brand and offer more upmarket streetwear choices. But Burberry also found itself in the focus of controversy at times under Gobbetti. The design firm reportedly torched more than $36.5 million worth of unsold inventory in 2017. The next year, the business declared it would cease the practice.
Shares of Burberry have nearly doubled over the previous five years, but the stock has still trailed its luxury store counterparts like LVMH and Kering in recovering from the pandemic. Ferragamo, made renowned for its shoes favored by Hollywood icons like Audrey Hepburn, said Gobbetti would take his new post “as soon as he is released from his contractual obligations.”
At the Italian luxury store, Gobbetti will likely again find himself in the midst of a turnaround. The business has battled to remain relevant in the age of social media fashion. Ferragamo did not specify what will happen to its present CEO Micaela Le Divelec Lemmi, who’s been in the post for almost three years. The board will convene July 1 “for the appropriate formalities,” the business said. Gobbetti said he will help Burberry during the transition. Burberry said the board will now begin seeking a successor.
“With Burberry re-energized and firmly set on a road to significant development, I feel that now is the perfect time for me to step aside,” Gobbetti said in a statement on his departure.
Salvatore Ferragamo said Gobbetti would become the company’s CEO “as soon as he is liberated from his contractual responsibilities” at Burberry in a separate announcement. Ferragamo’s stock rose in morning trade in Milan, then fell by 1.8 percent in the afternoon.
According to Solca, Gobbetti’s new position is “another huge challenge.” “First and foremost, the brand needs a full rejuvenation of its marketing fundamentals: product and communication,” he stated.
