By Geoffrey Smith
Investing.com -- Burberry (LON:BRBY) stock slumped in early trading in Europe on Monday after the luxury goods company said its chief executive Marco Gobbetti is leaving to become CEO of fashion rival Salvatore Ferragamo SpA (MI:SFER).
The news was met with dismay by Burberry shareholders, who have seen Gobbetti turn around the group's fortunes since he was appointed in 2015, after an ill-advised foray downmarket that tried - and failed - to broaden its appeal. The company's stock rose 7% on the day of its latest quarterly results in March, when it raised its forecasts for the current year.
“With Burberry re-energized and firmly set on a path to strong growth, I feel that now is the right time for me to step down,” Gobbetti said in a statement issued by the company.
By 4:30 AM ET (0830 GMT), Burberry shares were down 7.4% and on course for their biggest daily loss since the early stages of the pandemic last year. Ferrragamo stock was up a modest 0.3%, although that still represented a measure of outperformance on a generally uninspired start to the week.
Under Gobbetti's stewardship, Burberry has reinvigorated its product line-up and - somewhat belatedly- expanded its online presence. The stock had nearly doubled since his appointment in 2015. However, the group had still underperformed many of its rivals. The start of the pandemic found it still largely dependent on a handful of flagship stores in London and Hong Kong, which were badly hit by the collapse in international tourism and the sustained pro-democracy protests, respectively.
The stock price's drop on Monday means that the shares have actually lost over 3% in the last three years, according to Investing.com data. For comparison, Hermes and LVMH (PA:LVMH) have both more than doubled in that timeeframe, while Christian Dior has risen 90%.
The only major luxury fashion name to have underperformed Burberry in that time has been Ferragamo, which is down 7%. Ferragamo, which specializes in formal menswear, was also hard hit by the pandemic. The family that controls the brand has reportedly been looking for new management for months, after rejecting various offers for a possible stake sale that would have resulted in its losing control of the company.