Burberry's widely-acclaimed chief executive Angela Ahrendts is quitting her role at the British luxury fashion group to become head of retail at Apple, the pair said on Tuesday.
Burberry's chief creative officer Christopher Bailey will take over from the 53-year-old US national, adding chief executive to his title.
The group's share price slumped 6.0 percent at the open in reaction to the surprise announcement. It later stood down 4.86 percent at 1,508 pence on London's FTSE 100 index, which was 0.86-percent higher in midday trading.
US technology giant Apple said in a statement that Ahrendts would oversee the "strategic direction, expansion and operation" of its retail and online stores.
“I am thrilled that Angela will be joining our team,” said Apple chief executive Tim Cook.
“She shares our values and our focus on innovation, and she places the same strong emphasis as we do on the customer experience. She has shown herself to be an extraordinary leader throughout her career and has a proven track record.”
Ahrendts will have been chief executive of Burberry for about eight years by the time of her departure in 2014.
The London-listed firm, famous for its trademark red, camel and black check design on clothes and handbags, has undergone huge expansion into emerging markets with Ahrendts at the helm.
Ahrendts said she was "profoundly honoured to join Apple" and was leaving Burberry "in brilliant shape".
British national Bailey, who has been at Burberry since 2001 and chief creative officer for the past six years, said he was "profoundly moved and humbled to be asked to take on the CEO role".
Burberry chairman John Peace described the appointment of Bailey, 42, as "a natural progression".
Separately on Tuesday, Burberry reported sales of £1.03 billion ($1.65 billion, 1.21 billion euros) in the group's first half, up 14 percent compared with the six months through to the end of September 2012.
"The impressive update has been overshadowed by the news that the chief executive will be leaving," Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers, said in a note to clients.
"The shares have had a rocky ride yet have still managed to outperform the market strongly. Over the last year Burberry has added 41 percent to its price, as compared to a 12-percent hike for the wider FTSE 100," he noted.
Burberry opened 14 stores and closed eight during its first half.
"Store openings included a net two in China and one additional store in each of Brazil, Mexico and India as the group continued to invest in high potential markets," it said on Tuesday.
Founded in 1856 by dressmaker Thomas Burberry, the company invented the gabardine waterproof raincoat and provided kit to officers in the British armed forces during World War I.
Since mid-2006, when Ahrendts became Burberry chief, the group has doubled revenues and more than trebled its share price.
Ahrendts was last year by far the highest-paid chief executive among the FTSE's 100 top companies with a package totalling £16.9 million, according to a survey by pay consultancy MM&K.
She is currently one of only three women to head FTSE 100 index companies along with Carolyn McCall at budget airline EasyJet and Imperial Tobacco's Alison Cooper.
The number could increase should newly part-privatised Royal Mail, headed by Moya Greene, join as expected the leading index in a reshuffle due in December.