The value of luxury fashion

By Rebecca McCaffry

The CGMA business model briefing ‘What creates and drives value in your business?’ used the example of luxury fashion chain Burberry to illustrate how understanding and leveraging brand value can rescue a business from stagnation.

Burberry chief executive Angela Ahrendts is clearly considered to be well worth her pay packet – it was reported this week that she was the highest-paid chief executive in the FTSE-100 last year (2011-12), with a pay and rewards package of £16.9 million. This is the first time a woman has topped the league table, perhaps unsurprising when you consider that Ahrendts is one of only three female chief executives in the FTSE-100.

This lack of representation has been a long-standing issue; the 2010 CIMA report 'Breaking Glass – strategies for tomorrow’s leaders', produced as part of the Women in Leadership campaign, reported that, although women made up a third of CIMA members, they were six times less likely than their male counterparts to be in senior roles such as CEO or CFO. Progress continues to be slow in 2013, with a global ‘Women on Boards’ survey by GMI Ratings showing that women hold only 11% of board seats at the world’s largest and best-known companies.

To return to the luxury fashion theme, we hear that Emma Hill, creator of the iconic Alexa handbag, is set to leave her role as creative director of British leather goods firm Mulberry, reportedly as a result of disagreements over creative and operational strategy. The resulting fall in share price wiped nearly £40m off the company’s value overnight, and rumours are flying around the fashion world about where Hill, whose designs led to a monumental rise in profits for Mulberry during 2010 and 2011, will work her magic next.

This illustrates another key finding of our business models research: that organisations must recognise the value, both present and future, of their people – and the fact that their competitors may have an eye on their biggest assets.

Visit the CGMA ‘Resilient Business Models’ spotlight to read more.