Burberry, in crisis, excluded from the London Stock Exchange’s flagship index

The label founded in 1856 by Thomas Burberry - who received a “royal warrant” from the Queen of England back in 1955 - is going through a difficult period. After a series of negative results, its market capitalization fell to 2.48 billion pounds (2.9 billion euros). Like most of the industry's giants, Burberry has to contend with the crisis in the Chinese market, as well as stagnating sales in Europe and North America.

But beyond the general slowdown in consumer spending, Burberry is suffering from a series of bad decisions. Firstly, there was the desire, probably poorly implemented, to move upmarket. The brand wanted to offer more exclusive pieces, and faced with a lukewarm reception from customers, it sold off products to clear unsold stock. This maneuver, along with a number of poor management decisions, disoriented investors who eventually lost faith in the brand.

In just one year, the British company lost 70% of its value. As a result, Burberry has been excluded from the FTSE 100, the London Stock Exchange's most important index of the world's top companies, after 15 years on the list. Now downgraded to the FTSE 250, Burberry is much less prestigious and therefore less reassuring for investors.

The iconic label famous for its trench coat had seen its CEO, Englishman Jonathan Akeroyd, leave his position, barely two years after taking over. At the time of his departure, in mid-July, the company's quarterly sales had collapsed by -22%. He was replaced by the American Joshua Schulman. Burberry's management was counting heavily on his experience at Yves Saint Laurent, Gucci, Michael Kors and Coach, but despite his undeniable qualities, the new director failed to reverse the trend of poor financial results. Today, the new management team is considering new strategies: reducing production and distribution costs. Analysts now regard Burberry as an ideal target for a possible takeover bid. The next few months will be crucial for the brand.