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Burberry shares have dropped by about 8% following a downgrade by Barclays, which has reduced the luxury fashion retailer’s market value to £2bn – its lowest valuation since 2009, The Telegraph has reported.
The news comes after the retailer’s recent exit from the FTSE 100.
According to Barclays, Burberry’s situation could “deteriorate further”, as it is already one of the weakest performers in the luxury retail space.
As a result, they are not confident in the retailer’s ability to maintain its high-end luxury brand status, noting issues with its pricing strategy and overall performance.
While the British heritage brand has been working to regain investor confidence, a series of profit warnings led to a 70% plunge in its share price over the past year.
In light of this, Burberry has made the decision to suspend its dividend and replace CEO Jonsathan Akeroyd nearly two months ago.
Former CEO of Coach, Joshua Schulman, has been appointed as his successor. Schulman received a compensation package valued at up to £9.2m, which includes a £1.2m salary, bonuses, and a £3.6m “recruitment share award”.
In addition to this leadership change, Burberry axed hundreds of jobs as part of its cost-cutting measures in July.
The heritage brand has struggled to establish an identity that appeals to today’s consumers, despite efforts by creative director Daniel Lee to rebrand Burberry around a theme of “Britishness”, which have not yet resulted in increased sales.
However, chairman Gerry Murphy maintained in July that the business would undertake “decisive action to realign our offerings to better resonate with Burberry’s core customers”.
Burberry has been approached for comment.
