British luxury house Burberry could exit the prestigious FTSE 100 listing of top UK PLCs following a slump in its share price.
Burberry, which has just appointed former Micheal Kors boss Joshua Schulman as CEO following the departure of Jonathan Akeroyd, has experienced trading challenges of late, connected to the global luxury slowdown and a drop in sales in the key Chinese market.
Burberry shares are currently trading at approximately 705.8p per share compared to 2,158p a year ago. Its current market capitalisation of £2.5 billion places it at 140 in the FTSE 350 Index of the UK’s large and midcap stocks, according to reports.
The Index’s compiler FTSE Russell has guidelines which state that any company that ranks 111 or below among eligible shares at the time of the re-balancing of the Index (due to take place next week) will be relegated. Any that rise to 90th position or above will join the Index. Final changes to the Index will be revealed on 4 September.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, told Bloomberg that Burberry looked to be a “shoe-in for relegation from the FTSE 100”.
Schulman was named as CEO in July as the firm warned it will record a first-half operating loss if retail sales continue to fall at the current pace, having plunged by 21% on a same-store basis in its first quarter to 29 June.
The company said full-year earnings will also be lower than expected, and suspended its dividend, which hit is share price. Shares have lost a third of their value in the past three months.
While the global downturn in luxury has been instrumental in Burberry’s woes, former boss Akeroyd was criticised for his strategy of raising prices, while the creative vision of chief creative officer Daniel Lee is said to have strayed too far away from the brand’s classic looks, centred on its iconic trench coats.
Upon his appointment, Schulman said: “Burberry is an extraordinary luxury brand, quintessentially British, equal parts heritage and innovation.
“Its original purpose to protect people from the weather is more relevant than ever.
“I look forward to working alongside Daniel Lee and the talented teams to drive global growth, delight our customers, and write the next chapter of the Burberry story.”
