Burberry is hoping to reinvent itself as a super luxury brand. But investors aren't so sure.

Shares in the British fashion label dropped by as much as 12% on Thursday after the company said it planned to shift upmarket and offer more "compelling" leather goods.

Burberry, which is known for its trench coats and checked patterns, also said it would refurbish its shops and stop selling its products in "non-luxury" stores.

The moves are designed to help the company compete against the likes of Louis Vuitton and Gucci, which have built their reputations on pricey leather handbags.

"By re-energizing our product and customer experience to establish our position firmly in luxury, we will play in the most rewarding, enduring segment of the market," CEO Marco Gobbetti said in a statement.

But there are major concerns about how much the reinvention will cost. Burberry said the strategy shift would prevent sales from growing until 2021.

Luca Solca, head luxury analyst at Exane BNP Paribas, said the "metamorphosis isn't necessarily straight forward" because Burberry doesn't have a reputation for high-end leather goods.

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Patient investors, however, could be rewarded if the company can elevate its brand and convince discerning shoppers to splash out on more expensive items.

Louis Vuitton, for example, commands vastly higher prices for similar products.

Many of the chain wallets sold by the French brand in the U.K. retail for around £1,200 ($1,575), or twice the price of a comparable Burberry product.

"By selling more expensive bags, [Burberry] would be able to increase margins," said Rogerio Fujimori, a luxury goods analyst at RBC Capital Markets "Everybody is trying to do the same."

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Burberry is also in the process of changing key personnel. In October, the company announced that designer Christopher Bailey, who is credited with reviving the brand, would be leaving after 17 years.

Solca said that Gobbetti needs to quickly find a worthy successor, preferably someone with a deep knowledge of handbag designs.

"Any news on the new creative director -- as well as more clarity on the transition period -- should be a key share price driver today and in the near future," Solca said.

Burberry stock had been enjoying a very nice 2017, with shares rallying 35% before Thursday.

The firm's biggest markets are the U.S. and China, followed by the U.K., Japan and Germany, according to market data provider, FactSet.