FTSE in red as Burberry falls out of style
Market report Emma Newlands
Burberry fell into the red, dragging down the FTSE 100, as investors reacted poorly to a drop in UK sales over the final quarter of 2017.
The blue-chip index closed lower by 30.5 points at 7,725.43, with the luxury fashion house holding the bottom spot after tumbling 166p to 1,619p. It said like-for-like sales in the UK fell by a “high single-digit percentage” in the last three months of 2017.
The retailer failed to match strong comparable figures in 2016 when a boom in tourist spending sent sales up 40 per cent as many overseas shoppers took advantage of the weak pound. But City Index market analyst Ken Odeluga said yesterday’s stock market response, “sending as much as £640 million of share value up in smoke” looks like “an overreaction”.
Turning to sterling, despite no major economic announcements, it was up 0.3 per cent against the US dollar to a new post-brexit vote high of $1.383 - its highest level since June 24, 2016.
Versus the euro, the pound jumped 0.5 per cent to a one-week high of €1.130.
In UK stocks, education group Pearson dropped 33.4p at 685p as investors focused on declining revenues and a weak outlook for 2018 rather than the disposals and favourable tax rates that helped raise annual profit forecasts.
Shares in GKN rose 5.6p to 447.6p as the embattled engineering firm rejected a £7.4 billion hostile takeover bid by Melrose Industries.
The biggest risers on the FTSE 100 included Mediclinic International, up 18.8p at 619p, and Halma, up 18p at 1,307p. The biggest fallersincludedmicrofocusinternational, down 56p at 2,175p. The engine maker rose on news of a wide-ranging restructuring that will include reducing its five operating businesses to three core units. Shares in the publisher and events firm were boosted by plans to revive takeover talks with rival UBM that would create a £9 billion business.