Global luxury leader Burberry (BRBY) stumbles the best part of 5% (77p) to £15.08 on shock news CEO Angela Ahrendts is to leave next year to take up a role with technology giant Apple (AAPL:NDQ). The news overshadows an encouraging trading update and upgraded profit guidance from the quintessentially British brand famed for its high-end trench coats and leather bags.
Ahrendts, the architect of Burberry's transformation into a global digital luxury brand, is to step down as CEO by mid-2014 to take up a new position with iPads-to-iPhones maker Apple. She'll become senior vice president with oversight of Apple's retail and online stores and is expected to report directly to Apple chief executive Tim Cook.
Burberry stalwart Christopher Bailey, with the business since 2001 and as chief creative officer for the past six years, will retain his creative authority through a combined role as chief creative and chief executive officer at the luxury goods group, famed for its Equestrian Knight Device and Burberry Check trademarks.
Though it was always likely Ahrendts, one of the FTSE 100's few female bosses, would eventually return to the US, the loss of Burberry's inspirational leader dents sentiment towards the stock and overshadows another strong first-half sales performance.
For the six months to 30 September, retail sales grew 17% to £694 million and like-for-like sales were up 13% in both the first and second quarters with the balance delivered from new store space. Burberry generated double-digit growth in Asia Pacific and the EMEIA region (Europe, Middle East, India and Africa) as well as high single-digit growth in the Americas. Reassuringly, given fears over the emerging markets slowdown, flagged in detail by Shares here, the key market of mainland China saw 'high single-digit comparable growth in the second quarter.'
In today's update, the £7 billion cap flags a strong online performance with growth delivered 'in all regions', as well as from outerwear and large leather goods. In addition, Ahrendts is 'delighted' with the early response to Brit Rhythm for Men, Burberry's first direct fragrance launch after bringing its fragrance and beauty businesses in-house in April.
Burberry today raises its first-half taxable profit guidance from a year-on-year fall to a flat performance, in line with last year's £173 million result. The key driver is a better-than-forecast turn from the wholesale business, where sales (excluding the Beauty business) were only down 7% versus a previously predicted 10% decline, which Burberry insists demonstrates 'strong brand momentum globally'.
