HONEYMOON OVER FOR BAILEY AS A SMALLER BONUS LOOMS

THE well-paid star designer-turned chief executive of Burberry has been forced to cut his coat according to his cloth after the luxury brand’s sales slumped this year.

Christopher Bailey’s bonus will be reduced as part of a company-wide move to slash staff bonuses.

Burberry refused to say how much Bailey will lose, but he will still be able to buy his own highly-priced products.

Viewed in the fashion industry as a creative genius, he took home £7.9m last year, including a £1m salary and a £1.7m bonus. But after taking over as chief creative and chief executive officer in May last year, analysts yesterday warned his ‘honeymoon period’ is well and truly over.

When Bailey took over the dual role nearly 18 months ago there were fears he would not have the financial expertise to do the job. But he won over many City analysts – or at least he had until yesterday’s setback.

Luca Solca, an expert in the luxury goods sector at Exane BNP Paribas, said having a joint role as creative director and chief executive is a ‘complicating factor’ and that it could mean ‘necessary adjustments’ were delayed because Bailey was trying to do too much.

He added that although the company blamed its sales slowdown on ‘macro’ or big picture economic events its products might just be falling out of fashion. He said: ‘There seems to be a sign of brand-specific fatigue at Burberry.’

Sales of products including scarves and bags increased by 2pc in the first half but womenswear was flat and menswear slipped 1pc.

Chief financial officer Carol Fairweather denied products were losing favour with shoppers. She said its problems were driven by ‘consumer sentiment caused by volatility in the stock market and the devaluation of the remnimbi’ along with other ‘macro’ issues.

Burberry has launched a wide-ranging set of costcutting measures including £20m of cheese-paring this financial year including less travelling for executives and a freeze on hiring except in its shops. It is also planning to save between £20m and £30m by cutting the bonuses it pays out to staff across the group.

Bailey explained: ‘We have intensified our focus on driving sales and productivity, while taking swift action on discretionary costs.’