Angela Ahrendts: Exactly the right material

With another spectacular set of results, the astonishing turnaround in Burberry's fortunes continues. So how come its American boss understands 'British' so well?

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It is seven years since the former Eastenders star Danniella Westbrook almost did for Burberry.

The photograph of Westbrook and her three-year-old daughter dressed head to toe in the famous check, with matching buggy, told the story of how a 150-year-old classic British brand had become synonymous with chav culture even more powerfully than the company's collapsing sales figures.

That it would be unimaginable today to see the stars of The Only Way is Essex, Westbrook's 2011 counterparts, dressed the same way, is part of the story of how Angela Ahrendts, Burberry's 50-year-old chief executive, has transformed the company since her arrival in 2006. Other chapters include the stunning sales figures – £1.5bn last year, producing a profit of almost £300bn, more than a third higher than in 2009 – and the share price surge. The company has almost trebled in value over the past five years and Ahrendts is now one of only a tiny handful of women running a FTSE 100 company.

Leaders of businesses of this sort of scale talk more about where their companies might be in three to five years' time than the day-to-day operational stuff – even if it is not always what shareholders want to hear. Ahrendts unveiled another stellar set of results this week only for Burberry's share price to sink on her announcement of plans to double its investments in new stores around the world (rather than, say, handing more cash back to shareholders in the form of dividends).

Not that investors should have been surprised. Burberry has been on an expansion drive since spotting that the luxury goods market is the one part of the global economy definitely on a profitable upswing, even if much of the world is still fighting to recover from the financial crisis of three years ago. Its trick is to target a global audience that sees a high-end British brand as a desirable badge – of wealth, certainly, but also of sophistication.

China is the biggest play. Having opened a flagship branch in Beijing only last month, Ahrendts now has plans to take the number of stores in the country from 60 to 100. But it is opening new stores elsewhere in Asia too, as well as expanding and improving in Western markets.

Still, there is an obvious irony about Ahrendts' relentless drive to sell this vision of upmarket Britishness around the world – her own background isn't particularly upmarket and it's certainly not British.

Ahrendts grew up in New Palestine, on the outskirts of Indianopolis, where she was one of six children. It wasn't an especially tough childhood, but nor could this middle American suburb have prepared her for the cut-throat business of New York fashion retail, where she would spend 20 years after graduating from college.

Even that career, an impressive stint at Donna Karan notwithstanding, was mostly spent at retailers more focused on the mass market than Burberry – particularly Liz Claiborne, where she spent eight years before moving to Britain.

Christopher Bailey, the much-fêted chief creative officer of Burberry, who had a big say in Ahrendts's appointment having previously worked with her at Donna Karan, often says that a shared sense of feeling like fashion outsiders is one reason why their partnership has proved so successful. A working-class Northerner, Bailey has been given his freedom by Ahrendts, and that's been another crucial part of the Burberry success story. His collections have consistently struck the right balance between creativity and the practicality required for a high-street offering, albeit a top-end one. And note that the Burberry check, made notorious by Westbrook, now features prominently on less than 10 per cent of the company's products.

Ahrendts, meanwhile, has often concentrated on more mundane aspects of the business – overhauling its supply chain, for example, and bearing down on costs, particularly in the immediate aftermath of the collapse of the investment bank Lehman Brothers. The other major challenge has been to address Burberry's biggest mistake in the past, even worse than the lurch downmarket, which was the indiscriminate licensing of its brand to companies all over the world. The deals produced plenty of money in the short term, but allowing other companies to slap the Burberry label on their own products, irrespective of quality or design, was ruinous for Burberry's brand.

Ahrendts was quick to recognise that the franchise model would in the end doom the company's hopes of restoring and maintaining its premium rating, and has spent much of her tenure buying back the licenses, often taking a sizeable hit to the bottom line in the short term as a result.

Not that Ahrendts has no feel for showbusiness. It was her decision, for example, to relocate Burberry's catwalk shows from Milan to London, where they are now the stand-out highlight of London Fashion Week. She has also championed Bailey's often eye-catching use of modern technology. Sales assistants are invariably equipped with iPads, fashion shows have been broadcast in 3D and social networking sites are an ever-more important element of Burberry's marketing strategy.

She looks the part too. It helps that she has inherited the glamorous looks of her mother, who did some modelling work of her own back in Indiana, but Ahrendts also makes sure she is always photographed wearing Burberry – generally something from its Prorsum range, the collections through which the company showcases its latest creative thinking.

Any suggestion that Ahrendts is more style than substance would be deeply wrong-headed, however. Ask her subordinates what it's like working for her and a striking number describe her using words such as "inspirational". The commencement speech she gave last year to students graduating from her college, Ball State University, has become something of a YouTube hit. And her equals are no less impressed – Starbucks boss Howard Schultz, a man not known for parking his ego beneath his coffee beans, came away from an event singing her praises on Twitter last month.

There are critics who wonder whether Burberry ought to be capitalising on its success by launching aggressive bids for rival luxury brands (though some stock-market professionals tip the company as a bid target itself). Ahrendts's pay packet raises a few eyebrows too, with corporate governance experts questioning whether Burberry has been a little blinded by its chief executive's star quality.

There is no denying that she is handsomely rewarded – her earnings totalled £3.2m last year. Friends point to Burberry's results and talk about her work ethic. Fuelled on Diet Coke, she is up at 4.30am every day and travelling the world one week in four.

Sacrifices have been made too. Ahrendts's family is close, but on taking the Burberry job she had to relocate her husband and three children from New York to London. Gregg, her childhood sweetheart, was forced to give up a successful construction business, though his experience has proved invaluable in renovating the large neo-Georgian pile the family has bought in countryside to the West of London.

Will she go back to the US? One imagines so, in time. Her children are in an American international school and the family has deep roots back home. Burberry, 156 years old this year, will go on without her, so much the stronger for the American who has dragged it into the 21st century.

A life in brief

Born: June 1960, New Palestine, Indiana, US

Education: Graduated in 1981 with a BA (hons) in Marketing and Merchandising from Ball State University, Indiana, US.

Family: The third of six children, her father retired as a smalltown entrepreneur, and her mother was a local model. She met husband, Gregg Ahrendts in elementary school, and they have two daughters and a son.

Career: Has held a series of senior positions over the past 20 years – at Donna Karan International, Henri Bendel, and Liz Claiborne. Became an executive director of Burberry Group in 2006, becoming chief executive officer the same year.

She says: "Walt Disney's Core Purpose is simple: to make people happy. Burberry's is more expansive: to protect, explore and inspire."

They say: "People want to work for her because she's completely unadorned and she has a life. She's all talent and no pretension." – Paul Charron, then chairman and CEO of Liz Claiborne when Ahrendts was hired.