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London (CNN) — Luxury brand Burberry is dropping out of Britain’s main stock index after suffering a steep fall in value following a plunge in sales and profits.
The 168-year-old brand will leave the FTSE 100, which brings together the 100 most valuable companies listed on the London Stock Exchange, as a result of a quarterly review, the exchange said in a statement Wednesday.
The fashion house is now valued at £2.23 billion ($2.93 billion), 56% less than it was worth at the end of last year, as its share price has slid on the back of what one analyst has called a “long losing streak” with sales and profits.
Spending on luxury goods has been slowing globally but particularly in the world’s no. 2 economy China, hitting not only the likes of Burberry but also higher-end brands.
In July, the company replaced its chief executive — who had spent just two years in the role — after another disappointing quarter. It also warned that profit in the financial year ending in early 2025 was likely to be lower than expected and scrapped its dividend for the year.
The company, best known for its trench coats and purses, saw sales tumble more than 20% in the April-to-June period, signaling another tough year ahead. In the year ending on March 30, 2024, Burberry’s profit plunged 34%.
“We are taking decisive action to rebalance our offer to be more familiar to Burberry’s core customers whilst delivering relevant newness,” the company’s chairman Gerry Murphy said in July. “We expect the actions we are taking, including cost savings, to start to deliver an improvement in our second half.”
While the brand’s troubles have been partly blamed on its direction, many of the world’s best-known luxury companies are struggling. Their woes mostly reflect a striking turnaround in spending by Chinese shoppers, who had splurged on premium goods after pandemic restrictions in the country were finally lifted.
Anna Cooban contributed to this article.
The-CNN-Wire
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