Published On: Thu, Feb 7th, 2013

Burberry leads losses as FTSE stumbles

The FTSE 100 fell by 1% today on the back of comments made by the European Central Bank’s President, Mario Draghi. The President of the European Central Bank said he was concerned by the recent strength of the Euro and that he would be monitoring the 17 nation currency to ensure that it does not suddenly crash, causing anymore unnecessary uncertainty in the markets.

Even more concern was raised when Mark Carney, the man who is set to take the reigns at the Bank of England, said that the British economy would need further rounds of quantitative easing to “get off its knees”. This brought the recent rally that had taken the markets by storm throughout January to a halt, as many investors began to question the medium term security of their investments — particularly those of a high risk nature.

One such investment would be the Royal Bank of Scotland, or RBS, which saw its role in the LIBOR scandal last year result in a fine of £390m. Not only will that fine hit their bottom line but they were also hit with an Underperform rating by Credit Suisse, which compounded the misery on the markets for the day as they shed 9.2p, closing at 332.9p. Barclays and Lloyds also saw their prices hit, losing 2.95p and 0.23p respectively by the close of play.

The biggest decline of the day however was that of Burberry. The fashion brand saw its price contract by a massive 93p, closing at £13.37. There were multiple factors involved in the sharp decline, however the primary two were reports of a potential ban on advertising in China and changes at boardroom level.

Reports coming out of Asia suggested that China would be placing a ban on advertising of high end “luxury items”, which it is presumed Burberry would fall into the category of. The ban would put an end to plans that the company had for expansion in China over the next 12 months. The news that Stacey Cartwright, the company’s CFO, was departing and would be replaced by Carol Fairweather certainly didn’t help their cause.

The FTSE’s saving grace came in the unlikely form of Vodafone. The telecommunications giant announced worse-than-expected revenue, reporting a fall of 2.6% while analysts had predicted a 2.4% decline. Invesco Perpetual also sold their holding in the company on the grounds of “weakness in its European business and concerns about dividend cover”. Regardless of these issues, Vodafone advanced by 1.5p as investors awaited confirmation of increased revenues from Verizon Wireless, a joint venture of mobile operator in the US.

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About the Author

- Gregory previously worked for a leading financial news publication and is now assistant news editor of