Burberry shares tumble to 15-year low amid questions over its luxury brand status

10th September 2024

Burberry’s market value has plummeted to its lowest level in 15 years amid scepticism from City analysts regarding its ability to maintain its status as a “high-end luxury brand.”

On Monday, the luxury fashion retailer saw its shares drop by up to 8% following a downgrade by Barclays, reducing its worth to just £2bn.

The decline represents Burberry’s lowest valuation since 2009 and follows its recent exit from the FTSE 100.

The British fashion brand has been working to regain investor confidence after a series of profit warnings led to a 70% plunge in its share price over the past year.

Barclays analysts, however, predict that Burberry’s situation could deteriorate further, noting that it is already one of the weakest performers in the sector, The Telegraph reported.

They expressed concerns about its ability to sustain its high-end luxury brand image, citing issues with its pricing strategy and overall performance.

This move follows Burberry’s decision to replace its chief executive, Jonathan Akeroyd, nearly two months ago. Joshua Schulman, previously the CEO of Coach and with experience at Jimmy Choo, was appointed as his successor.

In addition to the new CEO appointment, Burberry kicked off plans to cut hundreds of jobs as part of its cost-cutting measures in July.

Concerns are mounting that the British brand is having difficulty establishing an identity that appeals to today’s consumers.

Despite efforts by creative director Daniel Lee to rebrand the company around a theme of “Britishness,” these initiatives have not yet resulted in increased sales.

In response to these challenges, chairman Gerry Murphy assured in July that the business would undertake “decisive action to realign our offerings to better resonate with Burberry’s core customers”.

Burberry has faced a slowing demand for luxury goods across the world, which has hit investors’ confidence in many of brands in the sector, including Gucci Balenciaga owner Kering, which was also downgraded by Barclays amid fears of declining demand in China.

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Fashion Luxury goods

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Fashion Luxury goods

10th September 2024

Georgia Wright