Burberry at three-month low as Bailey replaces Ahrendts as CEO

15th Oct 2013 14:34

Burberry's share price took a battering on Tuesday as investors gave a cool reaction to the surprise exit of long-running Chief Executive Officer (CEO) Angela Ahrendts, who is set to join Apple in a newly created position next year.Chief Creative Officer (CCO) Christopher Bailey, widely seen as one of the most influential people in the fashion industry, will attempt to fill her shoes, though analysts have raised issues with his level of experience.The stock was down 5.93% at 1,491p in afternoon trade, its lowest level since July 23rd.Ahrendts, Burberry's CEO of seven years, said that she is leaving the company in "brilliant shape" with a powerful management team, world-class supply chain and sensational brand momentum.The respected chief will leave the company in mid-2014 and move to Apple to head up the expansion and operation of its retail and online operations, reporting to CEO Tim Cook. Ahrendts earlier this year became the first woman to top the list of the highest paid CEO on the FTSE 100.Shareholders are now worried that Bailey may not be able to replicate the success of his predecessor, according to Market Strategist Ishaq Siddiqi from ETX Capital. "After all, he has not previously ran a business, especially one of that size and Ahrendts did transform the company in the luxury giant it has become with strong growth from emerging markets, formidable digital operations and strong group sales," he said.Meanwhile, with Bailey also retaining his current position of CCO, the sole custody of both roles has "led to concerns over the burden placed on one pair of shoulders, especially given his lack of experience for at that level", said Toby Morris, Senior Sales Trader at CMC Markets.The news came on the same day that Burberry delivered 14% growth in underlying sales in the first half, with strong growth in Retail (+17%) helped by strong demand from Chinese customers.The firm said that adjusted profit before tax for the first half is now expected to be flat on the prior year at £173m, better than previous guidance for a decline.BC