Troubled Burberry exits London's top-tier shares index
LONDON
British luxury fashion label Burberry is set to exit London's FTSE 100 after 15 years at the top-tier index, the stock exchange announced.
The relegation will "take effect from the start of trading" on Sept. 23, the exchange's FTSE Russell subsidiary said in a statement.
Burberry and the global luxury sector as a whole have been hit by strains in China's economy.
The exit of Burberry, a 168-year-old label, follows a regular reshuffle of the index containing the 100 biggest London-traded companies by market value.
Burberry was the FTSE 100's worst-performing company over the past year, its share price tumbling about 70 percent, giving it a market capitalisation of 2.3 billion pounds ($3 billion).
It will now move to the second-tier FTSE 250.
Jonathan Akeroyd left as CEO after the group itself described recent performance as "disappointing."
Akeroyd has been replaced by Joshua Schulman, a former CEO at American fashion brands Michael Kors and Coach.
A quick turnaround of fortunes is unlikely.
Revenue slid 22 percent to 458 million pounds in Burberry's first quarter.
Dan Coatsworth, investment analyst at AJ Bell, said that with Burberry's stock trading at a 14-year low, the company "was vulnerable to a takeover approach."
He added in a client note: "Any potential bidders would have to see through near-term problems and be confident in the company's ability to get back on track.”
"The decision to take Burberry more upmarket and then heavily discount products to shift unsold stock was a bad move. While shoppers love a bargain, discounting can tarnish a luxury brand as it is perceived to be less desirable."
