Burberry’s high-fashion bet faltered. Now it’s back to trench coats and check

In The Devil Wears Prada 2, ending up at Coach is the punchline to a failed fashion career. Investors in Tapestry, Coach’s owner, may see things differently. Over the past five years, their shares have surged, while the more upmarket Burberry’s shareholders have watched their investment roughly halve. Little wonder, then, that the historic UK brand is taking a leaf out of its mid-market competitor’s book. By dropping some airs, and prices, it has finally managed to stabilise its formerly-shrinking sales. Burberry’s problems began when it tried to play in the top tier of luxury. Under former chief executive Jonathan Akeroyd, the company got ever more aspirational, filling stores with increasingly expensive fashion pieces: by November 2023, nearly 30 per cent of Burberry’s stock was priced above £2,000 (US$2,675; S$3,417), according to Berenberg research. Its rarefied look failed to sell: revenue fell, and heavy discounting pushed gross margins as low as 62 per cent in the last two quarters of that year.Compare that with Coach, whose affordable luxury sold 5 per cent more last year compared to 2022, at a plush 75 per cent gross margin. As a result, the company — which at the start of 2023 was worth US$8 billion, or about the same as Burberry — is now six and a half times bigger than its British rival. Some of that might come down to geography. The strong American economy accounts for roughly 60 per cent of Coach’s sales: Burberry relies far more on China, where demand for luxury goods has weakened. Product mix favours Coach, too. It makes almost 60 per cent of its money from higher-margin handbags. Scarves, Burberry’s traditional stronghold, are hard to mark up as much. Still, Burberry’s new strategy should go some way towards bridging the gap. Under current chief executive Joshua Schulman — formerly of Coach and Michael Kors — the company has pushed out its avant-garde products and is returning to its classic trench coats, scarves and check pattern. Only about 3 per cent of its stock now sits above £2,000, according to Berenberg, meaning it can shift it without resorting to discounts. Its gross margin last year was up over 5 percentage points. The only drawback to Burberry’s new approach is that affordable luxury trades at a discount to the true top notch: Moncler, another outerwear company that successfully managed to reposition itself, is valued at a near 20 per cent premium to Coach on a forward price to earnings basis. Still, even putting Burberry’s expected earnings for the year ending in March 2030 on the same multiple as Coach yields a 50 per cent upside. Fashionistas may sneer at the comparison, but shareholders certainly shouldn’t. © 2026 The Financial Times. This article originally appeared in The Financial Times.