Burberry is set to exit the FTSE 100 index after 15 years, following a dramatic drop in its share price.
The luxury fashion brand’s shares have fallen by more than 50% in 2024, driven by a global decline in demand for high-end goods, particularly in the crucial Chinese market.
In recent months, Burberry has issued multiple profit warnings, leading to a significant sell-off among investors.
This development follows the departure of CEO Jonathan Akeroyd in July after just over two years in the role. Burberry has since brought in American fashion executive Joshua Schulman to lead a turnaround. Schulman, formerly CEO of Coach and Jimmy Choo, received a “golden hello” valued at up to £9.2 million.
Burberry’s stock outlook is currently cautious due to several factors:
- Share Price Decline: The company has experienced a significant drop in its share price, falling more than 50% in 2024. This sharp decline reflects broader concerns about the brand’s performance and market position.
- Global Demand Slowdown: There has been a global slowdown in demand for luxury goods, with particular softness in the Chinese market, which is a key region for high-end fashion brands. This slowdown has negatively impacted Burberry’s revenue and profitability.
- Profit Warnings: Burberry has issued multiple profit warnings recently, signaling ongoing challenges and uncertainty regarding its financial performance.
- Leadership Change: The company has recently appointed Joshua Schulman as CEO, hoping to revitalize the brand. Schulman, who comes with significant experience from Coach and Jimmy Choo, was given a substantial incentive package. His effectiveness in implementing a turnaround strategy will be crucial for Burberry’s future outlook.
- Strategic Adjustments: The success of Burberry’s strategic adjustments under the new leadership will play a key role in determining the future direction of its stock. Investors will be closely watching for signs of improvement in sales, particularly in the Chinese market, and the overall effectiveness of Schulman’s leadership.
Overall, while Burberry is working to address its current challenges and implement a turnaround strategy, the stock outlook remains uncertain and dependent on the company’s ability to stabilize its performance and adapt to shifting market conditions.
