Burberry's Creative Head Christopher Bailey to Leave Fashion House -- 2nd Update

Burberry Group PLC's creative head and former Chief Executive Christopher Bailey is leaving the British fashion house, after a tumultuous few years that forced him to relinquish the CEO role last year.

Mr. Bailey will step down from the board at the end of March, ending his career as Burberry's chief creative officer. In a stock-market filing the company said Mr. Bailey would support CEO Marco Gobbetti through the end of the year.

A Burberry spokesman said the decision to leave was Mr. Bailey's, citing his length tenure at the label, and that Burberry's search for a new creative head begins now.

Shares in company fell 2% on the news.

Mr. Bailey weathered sharp criticism and a deep stock decline during his two years as CEO, which ended with Mr. Gobbetti's appointment as Burberry's new head last year. Mr. Gobbetti, who previously worked as CEO of Celine -- the influential fashion and accessories brand owned by LVMH Moët Hennessy Louis Vuitton SE -- took the reins this year amid investor appetite for a turnaround.

Under Mr. Bailey, Burberry's sales were hammered for several quarters in key markets such as Greater China and the U.S. While sales have improved in China lately, the U.S. has remained a stubborn thorn in Burberry's side with the brand unable to compete with more coveted labels such as Louis Vuitton and Gucci.

Executives in the luxury industry have long maintained that luxury houses live and die by their creative vision and replacing Mr. Bailey could allow Burberry to spark a revival.

Mr. Bailey's designs have failed to wow customers in recent years, said Exane BNP Paribas Luca Solca, who has long maintained that the company needs new creative vision to get its mojo back.

"We believe this is a necessary move to make Burberry exciting again," said Mr. Solca. "Most brands that have gone through a revival had to first find new creative resources."

Rival Gucci has grown strongly of late under its creative director Alessandro Michele, who was named to the job in 2015. Since then, Mr. Michele has revamped the brand with a mix of extravagant prints, and retro flourishes such as embroidery. His designs have earned praise from critics and drawn droves of customers back to a brand that had fallen out of fashion.

When poached from Gucci at the age of 30 to be Burberry's design director Mr. Bailey was a little known figure in the industry. But he quickly rocketed into the spotlight and over time garnered a reputation for turning Burberry from a fusty British trench coat maker into a cutting-edge luxury powerhouse known the world over.

In 2014, the 161-year-old company elevated Mr. Bailey to CEO while allowing him to keep his old job as creative director, a split role that's extremely rare among big luxury-design houses.

The timing was bad, with currency moves in Greater China encouraging Chinese shoppers to spend money abroad rather than at home, and a slump in tourism from the mainland to Hong Kong after protests there and visa restrictions for Chinese visitors. In the U.S., a strong dollar capped tourist spending and Mr. Bailey continued to grapple with how to burnish Burberry brand, which has long been at the mercy of big department stores that regularly discount its clothes.

In response, he tried to buoy sales by simplifying Burberry's trench coat range, expanding scarf colors and offering the option to monogram products among other moves. He also cut costs through measures like not replacing staff when they leave and slashing travel budgets. But investors criticized the moves as not going far enough.

Now under Mr. Gobbetti -- a seasoned luxury executive with a business background -- investors are looking for Burberry to jump-start sales. So far, he's returned Burberry's beauty business to a licensing arrangement, a move investors have cheered, and indicated that Burberry will cut back on wholesale agreements, which have often limited its ability to control price and positioning, damaging the brand. More detail is expected next month when Burberry reports half-year sales.

Write to Saabira Chaudhuri at saabira.chaudhuri@wsj.com

(END) Dow Jones Newswires

October 31, 2017 07:55 ET (11:55 GMT)