Burberry Booted Off The FTSE 100

Burberry has been booted off the FTSE 100 after tumbling stock, a weaker demand in China and a growing consumer shift away from the brand’s luxury streetwear heydays of the early 2020’s.

The FTSE 100 is the London Stock Exchange’s index of the 100 biggest companies by market capitalisation. British heritage brand, Burberry (BRBY), was recently ousted from the FTSE 100 as share prices have tanked during the last year due to a decline in sales & consumer confidence with the publicly traded company losing 70% of their overall value over the last 12 months. Burberry stock will still be available to trade on the FTSE 250, demoting the FTSE 100 stalwart to the second division, or in the case of English football the Championship. So why was Burberry kicked off the FTSE 100? Well basically Burberry’s market capitalisation wasn’t big enough to fill the boots of its rivals with a slowing demand for luxury fashion in general and a desire to become even more luxury. A slowing economic drive from China, which was a core market for the classic check label, combined with a cost of living crisis and changing of trends has seen Burberry come out of favour with investors and more importantly its core consumers.

Rewind back to 2021 for a minute and Burberry was experiencing a huge revival, perhaps not quite on the same par of the early to mid noughties, but the classic check was back with a bang. Man Utd legend Marcus Rashford was the face of the brand and everyone wanted a piece of the luxury label. Creative director Riccardo Tisci, who had previously worked at Givenchy, tapped into the brand’s “All British” heritage with updated “luxury streetwear” designs that followed similar aesthetics seen from Virgil Abloh’s OFF-WHITE. A collaboration with Supreme in 2022 confirmed the celebrated check was back with the highest stock price of Burberry (BRBY) on the FTSE 100 also peaking in 2022. The comparable here ironically, is that regardless of investor confidence or what shareholders were expecting back as dividends, Burberry was the popping brand of 2022 and its share price reflected it.

But as any fashion brand knows, times and more importantly trends change. The luxury market has fallen off in recent years, partly down to the cost of living crisis where Burberry’s core consumer have struggled to afford rising rents & mortgage rate increases opting to pay higher interests on their mortgage payments as oppose to a new Nova check clad rain coat. The younger demographic, with a more sustainable approach, opted for pre-loved Burbs from quirky vintage sellers like Wavey Garms that sold late 90s & early noughties nostalgia with the backing of classic Garage tracks as oppose to a brand new RRP Burberry jacket that would cost the same price as your monthly rent. As always there’s a few factors at play but the last 12 months has seen Burberry’s stock nose dive thanks to a weaker demand in China, a traditional strong hold of luxury British brands, and an overall decline in the luxury market.

On the flip side of the coin other British heritage brands like Aquascutum, who to point out have also suffered their fair share of struggles over the last 10 years, have offered a more affordable range to access their brand, something which Burberry have failed to do. Purses are also tighter, a lot tighter in some cases with Burberry struggling to maintain their core clientele for cheaper alternatives. When you’re balancing out bills to feed to your family, pay a rent increase of 25%, a weekly food shop that costs nearly twice as much as it did 10 years ago on a 40k wage, the reality is you’re not going to splash out on £1000 plus on a jacket, or £300 on a polo shirt, whether it’s on Klarna or Clear Pay.

Trends have also played a key role. As the switch to more performance driven outdoors brands, as oppose to “luxury streetwear” which Burberry tapped very cleverly into, the British heritage brand has probably relied too heavily on nostalgia without offering more affordable lines. Luxury streetwear started to decline when its spiritual founder, Virgil Abloh, sadly passed away in 2021 with Burberry struggling to move forward from its monogram logo era of the early 2020’s. As a younger, more savvy consumer, looks to get their hands on a bit of Burbs, they probably don’t really care if its latest season or not as long as its got that classic check. There’s also the whole football subculture of the UK, a demographic that would have previously dressed head to toe in Burberry check now opting for more subtle performance brands like Arc’teryx and the “all black” uniforms of the European influenced Ultras. With speculation circulating about a company buy out, it’s not clear what’s next for the British heritage brand. With a recent merger between Stone Island & Moncler, maybe another big luxury brand will be the first one to make an offer. Keep posted at Sneaker Jobs for further news & don’t forget to subscribe to Sneaker Jobs & follow @sneaker_jobs to keep up to date with all the latest industry news.