Burberry Faces Setback: Dropped from FTSE 100 Amid Decline in Value
Luxury fashion brand Burberry, once a symbol of British elegance and craftsmanship, is facing a significant financial crisis. After a sharp drop in sales and profits, the 168-year-old company is being removed from the FTSE 100, the index that ranks the 100 most valuable public companies listed on the London Stock Exchange. This move comes after a quarterly review, as announced by the stock exchange on Wednesday.
Burberry’s Valuation Plummets
Burberry’s market value has taken a nosedive, now standing at £2.23 billion ($2.93 billion), a staggering 56% drop since the end of last year. This decline in value stems from a persistent “losing streak,” with the company struggling to maintain sales and profits. The global slowdown in luxury spending, particularly in China—the world’s second-largest economy—has hit Burberry hard, along with other high-end brands.
Leadership Shake-up and Financial Warnings
In response to its ongoing struggles, Burberry replaced its CEO in July, after just two years in the role. This leadership change followed another disappointing financial quarter. The company also issued a warning that its profits for the financial year ending in early 2025 would likely fall short of expectations. To manage its financial woes, Burberry decided to cut its dividend for the year.
Declining Sales and Profit
The company’s iconic trench coats and purses, which once drew in luxury shoppers worldwide, have seen declining demand. Sales plunged more than 20% from April to June, signaling tough times ahead. In the fiscal year ending March 2024, Burberry’s profit dropped by 34%, reflecting the challenging environment for the brand.
Burberry’s Strategy Moving Forward
Despite these setbacks, Burberry’s leadership remains optimistic. Gerry Murphy, the company’s chairman, acknowledged the challenges but expressed confidence in a turnaround. “We are taking decisive action to rebalance our offer to appeal to Burberry’s core customers while delivering relevant newness,” Murphy said. He also mentioned that cost-saving initiatives should yield improvements in the second half of the financial year.
Industry-Wide Struggles
Burberry’s downturn is not an isolated case. Many of the world’s top luxury brands are experiencing similar issues, largely due to a dramatic shift in Chinese consumer behavior. After years of lavish spending on premium goods, Chinese shoppers have curtailed their luxury purchases following the easing of pandemic restrictions.
As Burberry navigates this challenging period, all eyes will be on the company’s ability to adapt to market conditions and regain its position among the world’s leading luxury brands.
