Falling by more than half in the course of just 12 months is not a very fashionable thing in the eyes of many shareholders. But that is what has happened over the past year with one FTSE 250 share in the rag trade: Burberry (LSE: BRBY). The Burberry share price is now 55% lower than it was a year ago and the dividend has been axed to boot.

But the company remains profitable and has a lot going for it in my view. So, from the perspective of a long-term investor, could this be a bargain buy?

Challenges in every direction

To begin, what is the reason for the share price fall?

After all, a FTSE 250 company does not typically lose over half its value for no reason. In fact, a year ago, the company was still in the flagship FTSE 100 index. However, its rapidly declining market capitalisation meant that it was relegated to the secondary index.

For a snapshot of the problem, consider the business’s most recent quarterly trading update, released in July. Retail revenue and comparable shop sales were both down by more than one-fifth compared to the same period in the prior year. The company itself described the performance as “disappointing”.

The last financial year ended poorly in all markets – and things seem to be getting even worse. As the company said in July, “The weakness we highlighted coming into FY25 has deepened and if the current trend persists through our Q2, we expect to report an operating loss for our first half”.

Burberry remained profitable last year. So far, then, the current financial year has been alarming.

There are grounds for optimism

The company has changed management, something that in recent decades has had mixed results.

It also said it is “taking decisive action to rebalance our offer to be more familiar to Burberry’s core customers whilst delivering relevant newness”. I have no idea what that means: is it a focus on a traditional Burberry look, or something different and new? As a shareholder, that strategic fuzziness concerns rather than reassures me.

But a cost-saving plan currently in progress is good news in my view. It could help partially offset the bottom line impact of weak sales in the short term in my view.

Longer term, I remain persuaded that Burberry’s strong brand, long heritage, customer base, and global shop network are all strengths that can help it perform better in future.

The business has suffered from a downturn that has also affected many rivals. Once the global economy improves and demand for costly clobber picks up again, I expect Burberry’s revenues to grow.

Possible bargain

While the FTSE 250 business remains profitable as of its most recent results, the warning of a potential operating loss for the first half concerns me.

Still, I think the business looks cheap at its current £2.7bn market capitalisation.

So, it seems, do other investors. While the share price is down 63% in the past five years, it is up 32% since its low point last month.

I bought Burberry shares this year because I saw them as a potential bargain — and have no plans to sell!