City reassured that Bailey’s exit from Burberry to take a year
London Briefing: Bookies wonder how tough will clampdown on betting terminals really be?
Christopher Bailey stepping down as Burberry creative chief. Photograph: Chung Sung-Jun/Getty Images
Christopher Bailey must want to leave Burberry very badly. He’s giving up £16 million (€18.25m) in shares so he can quit the company he has spent the past 17 years with to “pursue new creative projects”.
In his near-two decades at the group, Bailey has helped transform the once-musty British brand into a leading force in the global fashion industry. For a time, the 46-year-old designer could do no wrong and was feted by both the fashion and financial press as Burberry, once famous only for its check trench coats, cemented its reputation as one of the world’s leading luxury goods groups.
Bailey’s appointment as chief executive in 2014 in addition to his role as chief creative officer, seemed to mark a turning point, however. In the City, Bailey’s dual role was seen as unorthodox – even for the fashion world – and it transpired that the new chief executive didn’t particularly like talking to investors or the financial press.
Burberry, meanwhile, started to suffer from the slowdown in the Chinese and Asian luxury goods markets and its shares went south. Shareholders began to gripe about the multimillion pound pay and bonus package that made Bailey one of the highest paid bosses in the FTSE 100 – and included a cash allowance of more than £400,000 to cover clothing and other items.
Last year, the group conjured up another unorthodox arrangement. It hired the respected luxury goods veteran Marco Gobbetti from the French house of Celine, owned by LVMH, to take over as chief executive, while Bailey retained his position as chief creative officer – and his salary – and was also awarded the title of president.
Gobetti’s arrival was welcomed in the City but there were concerns about how well the new arrangement with Bailey would work, as well as the ballooning boardroom costs.
Now we know the answer. While Burberry shares initially fell on Tuesday on news of the designer’s departure, there was relief that the new chief executive will be free to focus on the business of making money from fashion. There is, however, a rather crucial vacancy for a new creative guru.
Bailey said the decision to depart was not an easy one. And it won’t be a quick one either, something that’s likely to have reassured investors. His next move is not yet known but he will remain on the board until next March and will then stay on at the group until the end of the year to support Gobbetti.
Bailey’s departure will not hit the designer’s streamlined pocket too hard, despite the £16 million of shares he’ll surrender on his early exit, he’s still expected to walk away with a payout of up to £12 million.
Will the clampdown on fixed-odds betting terminals (FOPTs) – dubbed the crack cocaine of the gambling world – be tough enough to protect vulnerable and addicted punters from parting with their cash?
Shares in both bookmakers have taken a hit in recent months on the looming changes but there was relief yesterday at the relative leniency of the proposals. These will see the maximum bet on FOBTs cut from the current £100 – allowing gamblers to bet up to £300 a minute on the machines – to between £2 and £50.
There now starts a 12-week consultation period, during which the bookies will be arguing hard for the £50 limit, while gambling charities and other support groups will be pushing for the lower level.
The number of FOBTs has soared since the industry was deregulated in 2005, as have the numbers of problem gamblers, many of whom can least afford to feed their wages or benefits into the bookies’ machines.
The figures make alarming reading. Punters can spin the roulette wheel every 20 seconds at £100 a go, allowing them to lose up to £300 a minute. A lengthening of the time period between spins is another proposal under consideration.
Last year, gamblers lost a total of £1.7 billion on FOBTs, accounting for more than half the industry’s revenues. Figures from the charity GambleAware showed 233,000 FOBT users lost more than £1,000 in a single session; many lose far more.
According to the Gambling Commission, more than two million people in the UK are either problem gamblers or at risk of becoming addicted, figures that have rocketed in line with number of FOBT machines and the boom in online gambling.
Fiona Walsh is business editor of theguardian.com