By Tripp Mickle and Robert McMillan
Apple Inc. said that its retail chief, Angela Ahrendts, is
leaving the company and will be succeeded by a longtime operations
executive who now runs human resources, a move that comes as the
tech giant wrestles with flagging iPhone sales.
Ms. Ahrendts, one of Apple's most highly paid executives and
most prominent female leaders, joined the company in 2014 from
fashion house Burberry Group PLC and was charged with revamping
Apple's stores and improving employee morale.
During Apple's most profitable run, Ms. Ahrendts presided over a
sizable retail expansion that punctuated the company's luxury-brand
appeal and, more recently, close observers say she was a capable
caretaker of Apple's successful retail strategy but that little
changed radically under her tenure.
"She doesn't seem to have given the retail experience any
forward-leaning point of view," said Mark Cohen, director of retail
studies at Columbia Business School. "Though they made some noise
about creating a community center out of the store, I don't think
that had any traction."
Ms. Ahrendts had enjoyed the support of Apple's board over the
years and had been viewed as a potential successor to Chief
Executive Tim Cook, people close to the board said.
Apple doesn't disclose its store sales, but the company's wider
business has faced pressure from investors to reignite iPhone
sales, which have been disappointing. The company's iPhones sales
declined 15% to $51.98 billion during the three months ended in
December, the company's biggest sales period. In January, Mr. Cook
expressed disappointment about a decline in customers visiting
Apple Stores in China as the economy has slowed there.
Ms. Ahrendts, 58 years old, will be leaving Apple in April, the
company said Tuesday, "for new personal and professional pursuits."
Ms. Ahrendts plans to travel with her husband, according to a
person familiar with her thinking.
Succeeding her is Deirdre O'Brien, the company's vice president
of people who has been at Apple since 1998. Although Ms. O'Brien is
in charge of the company's human-resources functions, the longtime
Apple executive has also handled roles that dovetail with her new
retail position, including demand forecasting.
Ms. O'Brien will now be tasked with running Apple's more than
500 stores on five continents and several online sales channels.
She will continue to oversee human resources, talent development
and employee relations and will focus "on the connection between
the customer and the people and processes that serve them," Apple
said.
"The last five years have been the most stimulating, challenging
and fulfilling of my career," Ms. Ahrendts said in a statement.
"Through the teams' collective efforts, Retail has never been
stronger or better positioned to make an even greater contribution
for Apple."
Apple hired Ms. Ahrendts in October 2013 after a yearlong
search, from her job as chief executive at British luxury-goods
company Burberry. During her tenure there since 2006, Ms. Ahrendts
more than tripled sales and quadrupled the company's share price.
She was known for having refreshed Burberry's image with subtler
designs and more understated offerings, after the brand's famous
beige, black and red plaid had become a bit frayed from
overexposure.
Ms. Ahrendts, an Indiana native, broke ground as one of the few
women in Apple's executive ranks.
At the time of her hiring, Apple's stores were seen as stale,
and other retailers were copying its format of brightly lighted
open-plan places. In 2013, sales at Apple stores had fallen, year
over year, in the June quarter for the first time in four years.
Apple no longer breaks down its retail business in its financial
reports, but in 2012 retail sales accounted for 12% of total
revenue.
Leveraging her fashion-industry experience, Ms. Ahrendts oversaw
an expansion of Apple's retail business that increasingly thrust
Apple stores into prestigious locations in the world's fashion
capitals, including the Champs-Élysées in Paris and Piazza del
Liberty in Milan.
Ms. Ahrendts pushed for flagship stores in Seoul, Thailand and
other locales outside North American and European markets. She also
championed the idea of refashioning Apple stores as "town squares,"
gathering places in local communities where people could work with
Apple's staff to learn how to better use their iPhones, iPads, Macs
and other products.
Ms. Ahrendts is among the highest-paid executives in the retail
industry, earning more last year than the heads of many retail
chains. She received $26.5 million in total compensation last year
from Apple, which included a $21.5 million stock award -- nearly
twice as much as Mr. Cook. Doug McMillon, CEO of Walmart Inc.,
received $22.8 million last year in total compensation. A Wall
Street Journal analysis of CEO pay last year found the median pay
for retailing CEOs in the S&P 500 was about $10 million.
During her tenure at Apple, Ms. Ahrendts's compensation totaled
$172.8 million, including stock awards, according to company proxy
statements. After joining the firm she was granted a signing bonus
of more than 113,000 units of restricted stock, then valued at
about $68 million.
Because of their high-profile locations and role as
product-demonstration spaces, Apple's stores have an outsize effect
on the company's bottom line, said Toni Sacconaghi, an analyst with
Sanford C. Bernstein & Co. "It's more important than the
revenue would indicate."
Ms. Ahrendts leaves as a time when Apple users can no longer
simply make an impromptu visit to the Genius Bar, the company's
in-house tech support. Long waits for appointments at Apple Stores
have become a fact of life for many urban customers, an apparently
worsening issue for Apple's retail strategy, said Neil Cybart,
founder of Above Avalon.
Ms. O'Brien has long been a trusted lieutenant for Mr. Cook. She
played a key operations role in the launch of every Apple hardware
product over the past 20 years before being tapped to lead human
resources in 2017.
--Suzanne Kapner and Patrick Thomas contributed to this
article.
Write to Tripp Mickle at Tripp.Mickle@wsj.com and Robert
McMillan at Robert.Mcmillan@wsj.com
(END) Dow Jones Newswires
February 05, 2019 21:18 ET (02:18 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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