Last month the fashion brands Burberry and Gucci happened to have runway shows in the same week — Burberry as part of London Fashion Week and Gucci for Milan’s equivalent a few days later.
On Wednesday, the parallels between the two luxury brands were further in evidence as Burberry became one of the FTSE 100’s biggest fallers a day after Kering, the owner of Gucci, issued a profit warning.
The conglomerate said that sales of its Gucci brand in the first quarter of this year would be much weaker than expected, about 20 per cent lower than the same time last year, owing to a steep drop in sales in Asia.
Burberry, which also has heavy exposure to China, and whose shares have already fallen by about 17 per cent since the start of the year, fell another 40½p or 3.3 per cent, to £11.89½p on the news.
Analysts at Barclays said that Gucci’s troubles were “a particularly negative read-across for Burberry” because of the two brands’ similar profiles.
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Watches of Switzerland, another luxury retailer, was also down, by 22¼p, or 6.1 per cent, to 344½p due to continuing jitters in the sector and weak Swiss watch export data.
On the FTSE 100, Prudential, the Asia-focused insurer, was the biggest faller, despite its full-year results beating its key profit metric and being generally well received by analysts.
At Jefferies, analysts reasoned that the company’s exposure to Chinese real estate and poor performance by Eastspring, its investment management arm, were to blame for the company’s share price drop, which fell by 35½p, or 4.5 per cent, to 745p.
Weir Group, the miner, also fell by 45½p, or 2.3 per cent, to £19.51 after it was downgraded by analysts at UBS to “neutral”. The analysts reckoned that lower profit and cash estimates limited the upside in the near term.
Overall, the FTSE 100 was almost completely flat, down by 0.92 points, or 0.01 per cent, to 7,737.38. The FTSE 250 was up by slightly by 51.59 points, or 0.27 per cent, to 19,484.4.
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Leading the FTSE 250 was Close Brothers, the embattled merchant bank, which rose by 30½p, or 8.8 per cent, to 378p as some analysts said that the company’s heady share price fall, halving since the start of the year, makes it an attractive proposition despite its troubles.
Analysts at Shore Capital raised their rating to “buy” on Wednesday, saying that while the company’s interim results were disappointing, its share price had fallen to the point where there was little downside in buying.
Berenberg also maintained its “buy” rating on the stock, saying that while the risks “may be too great to bear for many investors”, owing to uncertainty about the extent of payouts due to the FCA’s review of motor finance loans, growth in Close Brothers’ core businesses remained “reassuringly resilient”.
Investec, the Anglo-South African bank, said that it had made a provision for the car finance inquiry but did not reveal how much it had put aside. The company’s share price rose by 16¾p, or 3.4 per cent, to 507¾p after its results exceeded expectations.
Johnson Matthey was up by 132½p or 7.8 per cent, to £18.40 after the speciality chemicals company said it would sell its division which provides precious metal parts for medical devices.
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At the other end of the index, Trustpilot shares fell by 16p, or 7.7 per cent, to 192p after Vitruvian Partners sold down its 9.04 per cent holding in the company to 5.31 per cent, according to a Regulatory News Service announcement, on the day after the company reported stellar results that tipped its shares to their highest price since January 2022.
Computacenter, which helps companies manage software projects, fell by 190p, or 6.5 per cent, to £27.52 after the company said its UK performance had been disappointing.
Wall Street report
Indices hit new highs after the US interest rate decision. The Dow Jones industrial average rose 401.37 points, or 1 per cent, to 39,512.13 and the S&P 500 was up 46.11 points, or 0.9 per cent, to 5,224.62. The Nasdaq rose 1.3 per cent to 16,369.41.
