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Burberry is the biggest loser on the FTSE 100 this morning, suffering its worst daily drop in six months after revealed declining revenues in its latest half-year results.
Shares are down 6 per cent in early Wednesday trading to a three-month low of £15.99 after Burberry posted a 13 per cent decline in its wholesale revenues pushing overall revenues lower by 1 per cent.
The slip comes despite retail revenues – which account for 80 per cent of total earnings – climbing 3 per cent in the six months to the end of March. Like-for-like sales also inched up 3 per cent on strong UK growth and expansion in China.
Analysts at Liberum noted that despite the “strong” trading update, much of the number were flattered by favourable currency effects as the pound has slumped following last June’s Brexit vote.
“There is a small slowdown in Q4 retail life-for-like sales over Q3, of 2 per cent vs 3 per cent which may give the market pause for thought,” said at Tom Gadsby at Liberum.
The FTSE 100 has now turned negative for the year as the pound has accelerated on the new of a snap British election on June 8.
“Should this continue towards polling day Burberry’s own, FX-driven rally could disintegrate”, added Mr Gadsby.
Analysts at Citi calculate Burberry will take a £10m hit from adverse currency moves on its pre-tax profits, calculated on exchange rates on March 31. The pound has since jumped to four month highs against the dollar.