Few prints are as emblematic as the Burberry check. For more than a century, the black, white, red, and tan plaid has represented a certain level of British sophistication and, more practically, a defense against even the worst wet weather. But earlier this summer, the cracks in fashion powerhouse Burberry's foundations became very apparent.
In July, after reports that it was cutting hundreds of jobs, Burberry said sales had fallen 21% year-over-year in the first quarter and that it would suspend its dividend. On the heels of earnings, the company also announced it was ousting its CEO, Jonathan Akeroyd. The market has not responded kindly.
Burberry's stock is down 24% since the news and 49% so far this year. It's a strong about-face for the brand and has left many wondering what exactly went wrong. The answer is a combination of too-high prices and too-high fashion.
Burberry has shifted away from its bestsellers, like the classic trench , into avante-garde looks that don't appeal to a broad market. It's also pitted itself against bigger, more established luxe players — with limited success. "They tried to be a major fashion player because fashion was back in fashion," Jelena Sokolova, a senior equity analyst at Morningstar, told Business Insider.
"It was the same with boosting leather goods. Neither of these things, I would say, are extremely strongly in the brand DNA." Take handbags.
Being an exclusive fashion name means playing in the competitive world of overpriced bags .