Mulberry CEO Guillon quits after turbulent two years

Reuters
A model presents a creation from the Mulberry Spring/Summer 2014 collection during London Fashion Week
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A model presents a creation from the Mulberry Spring/Summer 2014 collection during London Fashion Week September 15, 2013. REUTERS/Suzanne Plunkett

By Kate Holton and Neil Maidment

LONDON (Reuters) - Bruno Guillon has quit as chief executive of British luxury brand Mulberry (MUL.L), bringing an end to a two-year tenure marked by three major profit warnings and a move to hike prices that is yet to pay off.

In a brief statement, the maker of Bayswater and Alexa handbags said Frenchman Guillon had decided to step down immediately. He had been CEO for just over two years, having joined from Birkin handbag maker Hermes (RMS.PA).

The statement gave no reason for his departure and did not say if he would receive any payoff. "The board agreed that it was now time to part company," a source familiar with the situation told Reuters.

Godfrey Davis, 64, currently non-executive chairman after holding such roles as finance chief and CEO in his 27 years with the group, will become executive chairman until a successor is found.

In a statement, Davis said Guillon "has helped improve the quality of the Mulberry offering and enabled the company to increase its international appeal and grown international retail sales.

"I am confident that Mulberry has the heritage, brand appeal and products to build on what has been achieved," he said.

Mulberry shares rose 1.3 percent to 644.5 pence at 0841 GMT.

Under Guillon, Mulberry had hiked prices to take its brand more upmarket from a traditional position of "affordable luxury" and embarked on a drive to increase the company's profile overseas, targeting affluent Asian shoppers with new stores in key tourist spots.

But the group was forced to downgrade its profit forecasts at the end of January for the third time in around 18 months, after weak demand in South Korea and heavy discounting over Christmas hit sales in its British market, which makes up around 65 percent of group revenue.

GROWTH STRATEGY

The warning wiped over 25 percent off its shares at the time, a loss from which they are yet to recover as investors and analysts see little short-term benefit from Mulberry's growth strategy that requires investment at a time of slowing sales.

Mulberry is not the only luxury firm to suffer from its more upmarket and exclusive aspirations, with evidence growing that even larger rivals like Kering (PAR:PP) and LVMH (MC.PA), Gucci and Louis Vuitton's respective parents, are losing out to newer, more affordable brands.

Since his arrival, Guillon, who has also worked at LVMH and Nina Ricci, oversaw an early rise in Mulberry's share price to 2,500 pence, lifting its stock market value to 1.5 billion pounds ($2.5 billion), before a string of profit warnings dragged the stock down to be worth less than 400 million today.

Guillon issued his first major warning in October 2012 when sales of its leather goods and accessories were hit by a slowdown in Asia. Five months later he issued a second warning as fewer tourists hit its home market and 10 months on he warned for the final time.

On that occasion the 48 year old, who was paid a total of 807,000 pounds in 2013, had told Reuters his strategy would not change.

Adding to his woes, the group also lost Emma Hill, the creative director behind its hit Alexa and Del Rey bags, last September, and have yet to appoint a replacement. ($1 = 0.6014 British Pounds)

(Editing by David Holmes)

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