So far it’s been quite a turbulent year in fashion’s C-suite.
A quick tally of headlines in WWD from January through the end of May suggests roughly 10 more CEO changes than in the same five-month period in 2022.
Among the varied fashion, accessories and retail companies that have named new chief executive officers in recent months are Louis Vuitton, Christian Dior Couture, Michael Kors, Under Armour, Kohl’s, Roberto Cavalli, Jil Sander, The RealReal, Smythson, Sergio Rossi, De Fursac, Maje, Bremont, Pronovias, Fabergé, Alex Mill, Amiri, Slowear, Kiton, Santoni, Casadei, Audemars Piguet and Fabiana Filippi.
Observers stopped short of saying there are substantially more CEO changes than normal, while deducing and theorizing some of the rationales and drivers.
Caroline Pill, a London-based partner specializing in global fashion, luxury and beauty at search firm Heidrick & Struggles, said a change in ownership, financial underperformance and a recessionary market are among factors that can prompt a CEO change.
“If it’s a troubled company, they might want to change the profile, to try something else,” she said in an interview, stressing that digital savvy, strong product chops, expertise in Asia and a dynamic leadership style are among the most in-demand skills today.
“I think inspiration is a big, big topic right now, because there’s post-COVID-19 fatigue, combined with a tough environment. So you need to put someone at the helm who’s really going to energize those teams,” she explained.
Echoing other observers interviewed, Pill said she does not spy a dominant CEO profile, with recent appointments coming from a variety of merchandising, marketing and commercial backgrounds — and occasionally from within company ranks.
“I’d say it’s less of a specialist era than it used to be. Today, it’s more about leadership, vision, confidence, growth drive — those are words that come to mind,” Pill said.
Grace Nida, managing director and senior client partner, global luxury sector at KornFerry International in Paris, noted that during the pandemic, “firms were so risk averse at making changes. They just wanted leaders who were going to manage everyone through that COVID-19 transition, so we saw very little major movements.”
While there’s little hard data to prove there’s a faster churn of CEOs these days, observers acknowledged the steady flow of new appointments.
According to Pill, companies are “starting to think mid- to long-term again. So are the people in place strategically aligned with what the board wants?” she asked. “I think it’s a question of, ‘Do we have the right guy or woman for the next phase of our growth?’”
Jean Révis, a founding partner at Paris-based luxury consultancy MAD, cited management stability at most of the big, family-controlled fashion conglomerates in Europe, contrasting with turbulence elsewhere. (The changes at the top of Louis Vuitton and Dior, both high-flying brands within LVMH Moët Hennessy Louis Vuitton, were widely perceived as carefully orchestrated internal moves at a group renowned for grooming and promoting talent from within.)
“Smaller brands are facing much bigger challenges than the big brands,” Révis said. “The market has become polarized after COVID-19. It’s a winner-takes-it-all kind of situation right now. People need reassurance, and they are reassured by brands who have expertly managed their brand elevation.”
Révis noted this is especially the case in China, where the biggest heritage names in leather goods, jewelry and watches are perceived as safe havens and solid investments.
Small brands attempting to build desirability through communications will struggle to be heard, given that all the big groups “have over-invested in communications” so “it’s complicated to remain visible,” he explained, stressing the importance of free cash flow to renovate store networks, hire the best talents and win attention.
The flurry of recent executive changes suggests “a rethink of how these brands reconnect with their clients. It’s about securing their relevance.”
In the past, most fashion CEOs had a “retail profile,” whereas today more companies are pursuing “a more client-centric way to consider the role of CEO,” the priorities being to stay relevant, know the client and ensure the right product offer, Révis said.
Heidrick & Struggles’ Pill cited an influx of search mandates for “consumer engagement” positions dedicated to a deep understanding of “where the customer is going,” strong digital marketing being one component.
“Digital already seems like an obsolete word. Even omnichannel feels like an obsolete word. We’re moving into the next phase, which is a 360-degree approach,” she said. “There’s just more and more focus on customer acquisition, and customer engagement. How do you talk to them? How do you excite them, especially with so much noise everywhere? How do you bring them to the store? How do you create that real journey?”
Révis also flagged the importance of a strong rapport between the CEO and the creative lead. “That’s the secret of the brands that have been working. They manage to have this great communication and complicity between the creative director and the CEO. For me, it’s still a winning recipe,” he said.
KornFerry’s Nida agreed that digital savvy, direct-to-consumer capabilities and “modern retail experience” loomed large in several recent appointments at big U.S. firms.
She steered clear of naming specific companies, but suggested leadership style can also be a factor. Echoing Pill’s observation, Neda said corporate cultures are evolving and more “empathetic” and charismatic CEOs seem to be in demand.
In the high-flying luxury sector, “the really strong brands…have nailed down the products, merchandising and the brand positioning,” Neda said, noting this is what’s been fueling the recruitment of more CEOs with a “product merchant” background in recent years.
“In the luxury business, it’s generally a good thing to have a CEO with a longer tenure,” she noted. “If you want to build the brand equity or maintain the brand equity, you need someone who’s really thinking long-term.”
Neda noted that the ownership structure can affect the profile and tenure length of a CEO.
“In a private-equity-backed portfolio company, oftentimes you’ll see that the profiles are someone who’s very financially fluent. They generally have a much shorter time frame where they’re looking for an exit and tend to have CEOs who come from a finance or operations background, and often the focus is on cost-cutting.”
Maximiliano Nicolelli, managing director of the Milan-based Hydra Advisory, cited growing impatience to achieve “faster and more ambitious qualitative and quantitative results.”
“Shareholders are not willing to miss the momentum and consequently are acting much faster in implementing changes when results are not achieved,” he said.
Still, Nicolleli does not detect a dominant CEO profile among the flurry of recent appointments.
“Now we are in an era where what is driving success and continuity in the role is the ability to manage a brand, consistently across all key areas of business, having a very fine pulse of the market while mastering short- and long-term agendas and ensuring the brand is first and foremost desirable and culturally relevant,” he said.
What’s more, in an increasingly competitive market, there is a widening gulf between “CEOs that are able to create desirability and brand excitement versus executives that are more focused on pushing product out,” Nicolleli stressed. “Today, CEOs are required to be orchestra conductors, providing a very clear vision and coordinating all departments but more importantly ensuring that their brand is desirable and relevant.”
— With contributions from Andrea Onate, Milan