With little regard for maritime traditions, the retail and fashion industries rarely allow captains the opportunity to go down with the ship. Walking the plank is a far more common fate.
As one Chair put it to me “my job is to recruit an excellent board, ensure everyone’s voice is heard, particularly during strategy formulation… and sack the CEO if they aren’t delivering.”
It’s not a difficult decision when a CEO drastically underperforms or loses the confidence of investors, customers or employees. Where it gets more difficult is when the company’s performance is just not living up to expectations.
Someone with a fresh perspective may be better placed to turn things around, but too much churn at the top, followed by the de rigeur changes to the executive team, runs the real risk of creating a sense of incoherence, instability and even anxiety at a business.
Indeed, without a meaningful change in strategy, it can be actively counterproductive to change the captain, not least by drawing the attention of the corporate raiders.
Burberry
You can see this at Burberry. With the appointment of Joshua Schulman in July 2024, the luxury house is on its fourth CEO since Angela Ahrendts left in 2014, with two of them – Christopher Bailey (2014-17) and Jonathan Ackeroyd (2022-24) – having among the shortest tenures in the company’s history.
Throughout that time, Burberry has been pursuing its “elevation strategy”, aiming to shift the brand’s position on the luxury landscape from heritage to behemoth, raising prices and upgrading its store network at the expense of underperforming wholesalers.
It hasn’t worked. Neither Bailey nor his successors – including Marco Gobbetti, now at Ferragamo – have come close to hitting his ambitious £5 billion revenue goal, despite years of spiking demand for luxury fashion, led first by Chinese millennials between 2016 to 2019, then by the Covid-induced spending spree among US and European shoppers from 2020-22.
Sometimes there are structural forces working against a business – in this case that luxury consumers, particularly in China, don’t think Burberry is as premium as it thinks it is – and unless those conditions change the strategy must be revised, and quickly.
Burberry’s experience showed that just bringing in a new face is unlikely to change things materially, if the strategy remains the same, but there are signs it’s learned its lesson.
With the arrival of Schulman, Burberry appears to have found someone who understands the change imperative: announcing a turnaround plan that was received well, a realistic revenue target of £3 billion and some cost cutting that will undoubtedly give shareholders confidence.
John Lewis
There’s change at the top of the John Lewis Partnership too, with Dame Sharon White stepping down as executive chair in February 2025. Although it hasn’t experienced churn in comparison with Burberry, White’s five-year tenure marks the shortest in the partnership’s history, with all her predecessors having served between 13 and 26 years.
Things have been challenging for the partnership, notably with a loss of £234m in 2022 that forced the cancellation of the annual staff bonus scheme for only the second time since its launch over 70 years ago. But the board’s new leadership choices represent a clear change in direction.
While White’s experience was more financial and strategic, the team replacing her are retail veterans – new executive chair Jason Tarry spent decades at Tesco, while the department store division’s new head Peter Ruis was once John Lewis’s buying and brand director.
Strategic change is already on its way. John Lewis has brought back its much loved Never Knowingly Undersold pledge, and the new team is considering plans to cut 11,000 jobs over the next five years – not a positive sign, but at least a signal that they are willing to take drastic action to right the ship. For a partnership model business this is as good as being under new ownership.
In conclusion
It may be unfair to always blame a leader for a company’s underperformance, particularly as different conditions call for different solutions and you’ll never know the counterfactual: how would someone else have done in their place?
That doesn’t mean boards can allow underperformance to continue, but it does mean they have to be judicious about when to pull the trigger and ensure they pick a new leader who truly understands the company’s challenges, and who has the nous and experience to formulate and execute a winning strategy. Change for change’s sake won’t solve any problems.
