Luxury brand Burberry is set to be dropped from Britain’s FTSE 100 index, a move that reflects a steep decline in the company’s value following a series of disappointing financial results, CNN reports.
The 168-year-old brand, known for its iconic trench coats and purses, has seen its share price plummet, resulting in a 56% decrease in its value since the end of last year. This decline, coupled with falling sales and profits, has led to its removal from the FTSE 100, which comprises the 100 most valuable companies listed on the London Stock Exchange.
The company’s current valuation stands at £2.23 billion ($2.93 billion), a significant drop from its previous worth.
Burberry’s struggles mirror a broader trend in the luxury goods sector, particularly within the world’s second-largest economy, China. Following the lifting of pandemic restrictions, Chinese consumers have significantly curbed their spending on premium goods, impacting luxury brands like Burberry.
In July, Burberry replaced its CEO after another disappointing quarter, signaling the severity of the company’s financial challenges. The company also issued a warning that profits for the financial year ending in early 2025 are likely to be lower than anticipated and canceled its dividend for the year.
In the April-to-June period, Burberry experienced a sales decline of over 20%, further indicating a difficult year ahead. The company’s profit plummeted 34% in the fiscal year ending on March 30, 2024.
“We are taking decisive action to rebalance our offer to be more familiar to Burberry’s core customers whilst delivering relevant newness,” said Gerry Murphy, Burberry’s chairman, in July. “We expect the actions we are taking, including cost savings, to start to deliver an improvement in our second half.”
While the company’s struggles have been attributed in part to its recent direction, the broader luxury goods market is also grappling with challenges. The downturn in Chinese consumer spending has affected many of the world’s best-known luxury brands.
