British luxury fashion company Burberry Group was removed from the FTSE 100 index, the main index of the London Stock Exchange, for the first time in 15 years due to a sharp drop in its stock price caused by poor performance.
On the 4th (local time), FTSE Russell announced that following its quarterly review, Burberry will be excluded from the FTSE 100 index and downgraded to the FTSE 250 index starting from the 23rd of this month.
The FTSE 100 index includes companies ranked 1st to 100th by market capitalization among those listed on the London Stock Exchange, while the FTSE 250 index includes companies ranked 101st to 350th. Thus, Burberry will join the mid-cap stocks for the first time in 15 years since its inclusion in the FTSE 100 index in September 2009.
Burberry's stock price has plummeted 70% over the past year and 53% this year alone. This is the worst performance among FTSE 100 companies. Its current market capitalization is ?2.34 billion (approximately 4 trillion KRW), which is even smaller than the top companies in the FTSE 250.
Burberry, well known for its distinctive check pattern design, suffered due to China, a key luxury consumption market, lifting its COVID-19 lockdowns late. Even after China's endemic declaration, luxury consumption has not recovered as before due to the economic slowdown.
There is also an assessment that Burberry's distancing from its luxury image is not unrelated to its poor performance. US economic media CNBC analyzed, "During the 1990s and 2000s, the British working class gradually adopted Burberry's iconic pattern, severely damaging its premium image, which has made recovery difficult."
To turn the tide, Burberry appointed Joshua Schulman, who led Michael Kors and Coach, as its new CEO in July.
RBC analyst Piral Dadania said, "The current trend in Burberry's stock price indicates that the brand needs a soft momentum," warning that if sufficient measures to prevent further market share loss are not presented, the stock price could fall further. Burberry's financial results for the first half of the year are scheduled to be announced on November 14.
Meanwhile, insurance company Hiscox will be included in the FTSE 100 index, replacing Burberry.
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