Burberry was recently demoted from the FTSE 100, resulting in the brand’s lowest valuation in 15 years. This downgrade follows a series of profit warnings and concerns about Burberry’s future in the high-end luxury sector. Barclays analysts warned that the company’s position in the industry is at risk, which caused its shares to drop by 8%, contributing to a 70% year-long decrease in value.

Over the past year, Burberry has faced significant challenges. Economic strains in key regions such as China have exacerbated a slowing global luxury market. Internal management changes have also contributed to Burberry becoming one of the worst-performing companies in the luxury sector. Its demotion from the first-tier index signals a major blow to investor confidence.

In July, the luxury group appointed Joshua Schulman, formerly Chief Executive Officer (CEO) of Coach and Michael Kors, as CEO. Schulman’s background suggests a shift in strategy, with analysts predicting it could pivot Burberry towards a more accessible “British Coach” model, focusing on cost efficiency and expanding into outlet retail channels. This new direction may offer Burberry an opportunity to regain market share. However, it remains uncertain if the brand’s luxury identity will be compromised.

Burberry’s recent financial performance has left much to be desired. Comparable store sales dropped significantly in the first quarter of the year. The company’s current market capitalization hovers at just over 2 billion British pounds (2.384 billion Euros), well below its competitors in the luxury sector.

In the short term, Burberry struggles to stabilize its brand and market performance. With Schulman as the new CEO, there is cautious optimism that a change in strategy could help the company restore its market value.