Burberry Takes a Tumble: What Happened to the Famous Fashion Brand?

Burberry is a British brand known for its check print and chic trench coats that just took a severe blow. Burberry is out of the UK’s premier stock market index, the FTSE 100, after 15 years. This was due to one especially rotten year whereby the company’s share price fell about 50% in the last six months. This is the lowest the share price has been since 2010, and many wonder where it all went wrong.

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The Fall from FTSE 100
A removal of Burberry from the FTSE 100 is considered a big deal. The FTSE 100 is an important list that comprises the top 100 companies on the London Stock Exchange, based upon share prices. It is a hallmark of financial soundness and stability. But due to various factors, which went against Burberry, it lost its place in the list.

This change came after a regular review by the London Stock Exchange, which decides on the inclusion of companies in the FTSE 100. The decisions are based on the share prices of the companies at the end of the day of a specific date. In the latest review, Burberry was replaced by insurer Hiscox, promoted into the FTSE 100, while Raspberry Pi, which makes small, low-cost computers, entered the FTSE 250 after recently floating onto the market.

Why Did Burberry’s Share Price Fall?
So, what are the reasons for such a sharp decline in the share price of Burberry? There are a few reasons for such a decline. First, it has become the victim of China’s slow reopening after the COVID-19 pandemic. China is a very huge market destination for high-end products, and Burberry relies heavily on Chinese shoppers to achieve sales. However, the slow recovery of the Chinese economy translated to fewer Chinese customers purchasing Burberry products.

Furthermore, Burberry was faced with the general slowing-down of the luxury segment. With the cost-of-living crisis, fewer people were spending money on high-end goods. This has strained the profitability of the company and made it difficult for Burberry to maintain a pace with other brands within the luxury segment.

Besides, Burberry had to make some unpopular decisions in light of trying to stabilize its finances. The company installed Jonathan Akeroyd as chief executive only a little more than two years ago and named Joshua Schulman, an executive who spent years working for the famous fashion houses of Michael Kors, Coach, and Jimmy Choo. Burberry also announced a decision to withhold dividends, which refers to a payment given to shareholders in a company from its net profit. This is usually a sign that a firm seeks to economize and is in relatively bad financial condition.

The Burberry Challenge
Now, with the guard change, it becomes the mammoth task for its new chief executive officer Joshua Schulman to revive things at Burberry. As per Susannah Streeter, the head of money and markets at Hargreaves Lansdown, all will not be easy as far as the road ahead is concerned. That gets the new chief executive, Joshua Schulman, turning things around from here-a tough job-she said. His experience at brands like Michael Kors, Coach, and Jimmy Choo should help Burberry rebuild brand desirability, she added, but this is likely to take considerable investment and patience.

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This means he will invest time, money, and effort to make Burberry attractive to shoppers once more. New ideas will need to be created by Joshua Schulman that will make the products desirable and help increase sales, although it may be a while before any real success can be seen from this.

Moving to the FTSE 250
This means Burberry will fall to the FTSE 250-a listing of the next 250 biggest companies on the London Stock Exchange after the FTSE 100-since the recent review. Although this is also a great achievement, it is not as boastful as being in the category of the FTSE 100. Burberry will have to work extra hard to recover and probably find its way back into the top 100 companies in future times.

What’s Next for Burberry?
For all its recent struggles, Burberry has a rich history and is a resilient brand. Known for several iconic designs, foremost of which is the classic trench coat with its equally distinctive check pattern, it is time for this brand to evolve in order to remain relevant in this fast-changing market. This might mean exploring new designs and targeting different customers or expanding into new markets.

With fresh ideas from Burberry’s new leadership under Joshua Schulman, the brand is bound to get back to where it once belonged. It may take some time and patience, but many are hopeful that Burberry will get back on its feet. It will be quite hard, but at least it has a direction to work its way back toward.

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The departure of Burberry from the FTSE 100 denotes a tortuous period for this iconic British brand. This is also bad news for a company that has fallen in share prices, changed leadership, and moved from the FTSE 100 to the FTSE 250. But now, with a new CEO who has worked with other top fashion brands, there is hope that Burberry will bounce back. But the next few months will be crucial, as this company struggles back to get its reputation and position among UK’s best companies. Only time will tell if Burberry can turn the corner to regain its former glory.

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