Speculation is mounting regarding Burberry’s potential removal from the FTSE 100 Index due to declining share prices.
- Burberry’s share value has plummeted by 70% over the past 12 months, marking a 14-year low.
- The brand has experienced a challenging financial year, with profits falling by one-third.
- Burberry’s revenue dropped 4% year-on-year, with a notable 12% decline in fourth-quarter store sales.
- Joshua Schulman replaced Jonathan Akeroyd as Burberry’s CEO amidst these challenges.
Burberry, the renowned British luxury brand, is facing speculation about its potential relegation from the Financial Times Stock Exchange (FTSE) 100 Index, a list of the top 100 blue-chip companies on the London Stock Exchange. This speculation arises from a significant drop in Burberry’s share prices, which have fallen by 70% over the past year, reaching their lowest point in 14 years this August. The impending decision by FTSE Russell next week will determine whether Burberry remains in the FTSE 100 or moves to the midcap FTSE 250 Index, based on current share prices.
Burberry’s financial struggles have been evident throughout the year. The company reported a one-third decline in profits for the year ending March 30, 2024, amid a global slowdown in demand for luxury fashion. Additionally, revenue decreased by 4% compared to the previous year, with an alarming 12% drop in fourth-quarter sales, attributed to weak consumer confidence. Former CEO Jonathan Akeroyd acknowledged the difficulties, stating in May that “executing our plan against a backdrop of slowing luxury demand has been challenging.”
Amidst these tumultuous times, Burberry underwent a significant leadership change. Joshua Schulman was appointed as the new CEO in July, following the sudden departure of Jonathan Akeroyd, who stepped down immediately. This leadership transition reflects Burberry’s strategic response to its current challenges as it seeks to navigate through fluctuating market conditions.
The market’s anticipation surrounding Burberry’s potential demotion from the FTSE 100 is a pivotal moment for the brand. Being part of this prestigious index for 15 years has been an emblem of Burberry’s status and influence in the luxury market. However, its possible inclusion in the FTSE 250 Index could signal a downturn in its financial resilience and market position.
Burberry’s current predicament highlights the broader economic challenges facing luxury brands today.
