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Kirby Perkins, managing director at Crist Kolder Associates, a search firm specializing in the role of chief financial officer, can’t remember a busier time at the company.
“The market for specialized financial talent is white hot,” Perkins said. It started with VV when companies found themselves in a position where they needed a senior financial executive to solve the problem.
Last year, 50 fashion companies – LVMH Fashion Group, MatchesFashion and Skims among them – named new chief financial officers, according to Kirk Palmer and Associates, an executive search firm. Just this month, Allbirds, Stitch Fix and Burberry have replaced their CFOs. Asos has been rotated through two interim CFOs since October.
While each situation is unique, the frenetic clamor reflects some fundamental changes in retail over the past few years that have made CFOs’ jobs more challenging. The pandemic and labor shortages are putting pressure on companies’ budgets, while high inflation, slowing growth, rising interest rates and the Silicon Valley banking crisis have added to the stress of retailers. Then there’s the constant drumbeat of consolidation and the rise of e-commerce, which over the past decade has changed conventional wisdom on everything from investment strategy to real estate valuation.
The result is that the role of CFO — the chief executive officer of a company’s financial planning and investment strategy — has become “in demand and in demand,” according to Lisa Yae, managing partner of Hannold Associates’ retail and luxury goods practice.
“My guess is we’re seeing the beginning of it,” she said. “Companies, investors and shareholders look to boards and executive teams to ensure they have the right CFOs in place… to mitigate risks and plan for what the next year will look like.”
The new CFO toolkit
In the past, chief financial officers were often responsible for things like crunching numbers, monitoring cash flow, balancing budgets, and controlling expenses. Nowadays, CFOs play an important role in companies’ decision making and are expected to have soft skills such as effective communication, agility and team building skills.
What’s more, their influence on the CEO goes beyond advising on the company’s finances, “and has grown to become a thought leader in every aspect of the business,” said Kyle Rudy, senior partner at Kirk Palmer Associates.
One sign of the shift, Perkins said, is that they are increasingly coming from a Master of Business Administration (or MBA) background — which includes training in finance and accounting but also marketing, management and business ethics — as opposed to a certified public accounting (or CPA) background, which focuses The direction is strictly financial. (An individual can hold both an MBA degree and a CPA certification.)
“In the past, that was the bean counter — coming from the accounting level and before the corporate controller or chief accounting officer took on the role of CFO,” Perkins said. Now we see the individuals involved in the operation.
In general, career paths for leaders who emphasize financial planning and analysis rather than primarily accounting roles have become more desirable, she said.
Burberry’s new CFO Kate Ferry, for example, is joining the luxury brand from McLaren Group, where she was chief financial officer, but her work experience includes a two-year stint as a retail analyst at Dresdner Kleinwert Benson in London in 1998 and a nine-year stint. In the year Since 2000, as director of the equity research group covering European general retail for Merrill Lynch. Before becoming the CFO of Nike’s Jordan brand in 2021, Skims’ new CFO Andy Muir (she got the role last May) was a financial analyst for Bank of America and PepsiCo.
Fashion companies in particular have grappled with a sharp decline in real estate over the past decade as they closed stores and reduced M&A activity in certain sectors, challenging finance chiefs to “be more prudent-minded over the long term.” Craig Rowley, senior client partner at Korn Ferry, is making more financial investments than he has in the past.
The growth of online shopping, which got a second wind during the pandemic, has only added to the complexity of financial planning, with many fashion companies struggling to maximize e-commerce margins as consumers demand free and fast shipping, he said.
“When you’re 30 percent e-commerce, it’s hard to make money,” Rowley said. “You can’t make money sending a bottle of shampoo to someone’s house.”
At the same time, the DTC turmoil has eroded stock prices and earnings at a faster clip than many previously high-flying industry disruptions last year. That crisis could be a key driver behind the CFO outcry at Allbirds, Asos and Stitch Fix — all three of which are undergoing restructuring plans, experts say.
This month, clothing checkout retailer Stitch Fix replaced its CFO with finance veteran David Aufderhaar, who was the company’s senior vice president of finance for nearly four years. Aufderhaar was previously Twitter’s VP of finance and financial planning and analysis (or FP&A) — and spent nearly a decade at Visa in a number of executive roles, primarily in the FP&A function.
Cause of experience
As the economic outlook worsens, more companies will start looking for experienced finance chiefs who have “been through recessions” to step them through, he said. Of the 113 new CFO hires last year, 64 percent were experienced CFOs, compared with 36 percent of previous CFO hires, a Kirk Palmer Associates study found.
But fashion companies need to balance their need for highly experienced CFOs – these leaders are good enough to adapt to the new consumer landscape – where e-commerce remains an important channel and issues such as sustainability and diversity are at the forefront. For users and employees.
“CFOs must help companies navigate this incredibly volatile and uncertain macro environment while making strategic investments in data, technology, e-commerce, stores and supply chain logistics,” he said. They are asked to offer quick wins and long-term strategies.
These complex needs require a broader, more strategic leadership competency beyond the traditional financial one.
Companies are increasingly employing personality tests and psychological assessments aimed at measuring emotional intelligence to ensure their finance leaders have the right mix of skills, Perkins said.
“[Companies] They’re focused on getting that individual element right,” she said. “Everybody talks [the importance of] Culture and being able to lead in times of change requires some tremendous interpersonal skills.
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