The British fashion house, which has a string of warnings and poor results and changed CEO in July, is set to be dropped from the FTSE 100, the London Stock Exchange’s flagship index, at the beginning of September.
It’s going to be a cruel autumn for Burberry.
The troubled British fashion house, which changed CEOs last month and whose performance is struggling, is likely to be excluded from the FTSE 100, according to the quarterly report of the London Stock Exchange Group (LSEG), published on Tuesday August 27.
Burberry’s poor performance has not escaped the notice of FTSE Russell, a subsidiary of the London Stock Exchange, one of the world’s leading index providers.
Last on London’s flagship index
It has thus indicated that Burberry, currently in…hundredth (and therefore last…) place on the FTSE 100, the London Stock Exchange’s flagship index, should – barring a miracle – no longer be included in the next ranking, which will be unveiled on September 4, after market close.
In 2024, with its share price down 51.1%, the British fashion house’s market capitalization fell to 2.48 billion pounds (2.9 billion euros). In August, Burberry reached its lowest level in 14 years! According to the financial press, the company is now trading between 130th and 145th place on the London Stock Exchange. It is therefore highly likely to move into the London Stock Exchange’s second major index, the FTSE 250.
For analysts and the financial press, this hypothesis is almost certain.
A bad patch
The venerable House, symbol of British luxury, is going through a bad patch in its 2023-24 financial year, which some compare to that of the 2008 global financial crisis.
Burberry has even been described by a British journalist as “the big sick man of luxury in Europe, along with, to a lesser extent, Kering”.
It has to be said that the company’s latest announcements are far from reassuring: revenues fell by 20% like-for-like in the first quarter of 2024-2025, and the company expects to post an operating loss in the first half of the year.
Burberry has issued two profit warnings for 2024. In the wake of the latest, unveiled on July 15, the suspension of dividend payments and the resignation, with immediate effect, of CEO Jonathan Akeroyd were announced.
Replaced by Joshua Schulman, Jonathan Akeroyd, who had previously worked for Alexander McQueen and Versace, had only joined Burberry in April 2022. But he had failed to find the right martingale for the company.
An unwelcome move upmarket
According to several observers, Burberry’s recent strategy of moving too far upmarket had a detrimental effect. In a less buoyant luxury market, this strategy led to a large number of unsold items and discounts, damaging the company’s desirability and image.
The profile of the new CEO, Joshua Schulman (ex-CEO of Michael Kors and Coach), could lead him to reposition Burberry in a more accessible luxury segment.
But the British House is also suffering from the economic situation and the poor health of the Chinese market, an important destination for it.
So, while appreciating the change in management, observers are skeptical about Burberry’s short-term recovery… Not only do they expect the company to drop out of the FTSE 100 at the beginning of September, but they also don’t expect a comeback in the prestigious index for some time to come…
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Read also > Burberry relies on its new CEO to get back on track
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