Burberry, the renowned British fashion and accessories brand, will officially exit the FTSE 100 index as of September 20, 2024. This move marks the culmination of challenging year for the company, culminating in its reclassification to the FTSE 250 index effective September 23. This significant index change highlights the current turbulence faced by the brand within a highly competitive market environment.
FTSE Russell, a leading global index provider, announced the adjustment following a substantial decline in Burberry’s stock valuation. Such reclassifications occur when a company’s market capitalization falls below the threshold required for FTSE 100 inclusion. Historically, similar adjustments have been made; for instance, Marks & Spencer exited the index in 2019 but rejoined in 2023.
Burberry, which first listed on the London Stock Exchange in 2002, and joined the FTSE 100 in 2006, has seen a dramatic downturn over the past year. The company’s share price has plummeted nearly 70 percent, reducing its market capitalization to approximately £2.23 billion. This decline reflects broader economic pressures impacting the luxury sector, one of the most challenging periods for the industry in over a decade.
Financially, Burberry has struggled with a 22 percent decrease in first-quarter retail revenue, which dropped to £458 million. Additionally, comparable store sales fell by 21 percent. Chairman Gerry Murphy described the quarter as “disappointing” and indicated that if the trend continues into the second quarter, the company might report an operating loss for the first half of the fiscal year, which ends of September 30.
In response to these setbacks, Burberry has undergone a significant leadership transition, in July Joshua Schulman was appointed as the new CEO, succeeding Jonathan Akeroyd. Schulman, with a robust background in high-end luxury, is tasked with revitalizing Burberry’s market position. Murphy lauded Schulman’s track record in building global luxury brands and emphasized that his strategic vision for expanding Burberry’s focus on luxury outerwear and soft accessories will be vital for the company’s recovery.
As Burberry navigates this period of transformation, industry observers and stakeholders will be keenly watching how Schulman’s leadership influences the brand’s future performance. The company’s ability to adopt and execute a refined luxury strategy will be critical in regaining its foothold in the competitive fashion landscape.
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