How Burberry Became Fashion's Biggest Fail Of The Year

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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.

Burberry has shifted away from its bestsellers, like the classic trench , into avant-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 , one of the most high-margin items a luxury house can sell. But Burberry hasn't been able to keep up with the likes of Louis Vuitton or Gucci.

But things aren't hopeless at Burberry, which did not respond to a request for comment from Business Insider. A strategy that focuses on the brand's core products — its outerwear — and eschews a bloated price structure in favor of more broad appeal could help turn the company around.

Like many legacy brands — Hermès, Louis Vuitton — Burberry was created for practicality, not for fashion's sake. Thomas Burberry, the founder, invented a proprietary fabric in 1879 with the goal of protecting customers from the notoriously poor British weather.