Mulberry & Burberry drag UK stocks downWednesday, 24 October 2012
Luxury stocks had everyone talking on Tuesday,
with British Mulberry and Burberry leading the losers’ wagon while its American peer Coach shone in an otherwise opaque session.
The FTSE 100 has slid 38.5 points to 5,844.4 as investors absorb gloomy domestic company news. The London benchmark index was dragged down by fashion mogul Mulberry and Burberry, which dropped 29 percent and 4.1 percent respectively.
UK stocks declined for the third consecutive day, led into the red by Burberry, which shares slumped 4 percent Tuesday after its peer Mulberry issued a surprise profits warning. After the luxury handbags maker said profits would be lower than last year due to the weaker Asian consume, investors in Burberry sent the stock down 48.5p to 1123.5p, while Mulberry's shares slumped by a quarter or 345p to 975p.
Mulberry plunged 29 percent, its biggest tumble in 14 years, as the luxury-handbag maker said a tougher climate in Asia has led to declining shipments to wholesale customers. “The market is trying to struggle with a number of questions,”Bill Blain, a strategist at Mint Partners Ltd., said on Bloomberg Television in London. “Within the stock market everyone is worried about debt cliffs and earnings.”
Meanwhile, Coach reported sales of 1.16 billion dollars for its first fiscal quarter ended September 29, 2012, compared with 1.05 billion dollars reported in the same period of the prior year, an increase of 11 percent. Its net income for the quarter totaled 221 million, with earnings per diluted share of 0.77 dollars. The company also announced that its Board of Directors has authorized the repurchase of up to 1.5 billion dollars of its outstanding common stock by June 30, 2015. The stock ended up the trading session, gaining 0.1 percent.
Coach’s stock rallied after midday, climbing toward 59 dollars, to rank as the biggest gainer in the S&P 500 index.