If you cast your mind back to my first post (shouldn't be difficult, it was only on Monday), I promised you some posts about how my favourite companies are faring in the stock markets. And I'm always true to my word.
You can imagine my mixed emotions when I was casually flicking through news stories in bed yesterday morning (because I'm THAT dedicated to economics) when I came across a story about Burberry (let me repeat: err... Burberry!). You can imagine my delight when it dawned on me that I might have a possible first post that's actually about economics, but also my distraught frame of mind when I realised that shares had dropped, and big time.
The overview of the situation? Burberry's shares dropped by just over 20% to £10.88 (from £13.75), which is the lowest figure since last October, which wiped £1.3 billion off their stock market.
What, I hear you cry, caused this decrease? The answer, according to The Guardian, is a simple one: China. The Chinese love a good luxury item, to prove this, all you have to do is visit an outlet mall in any country. At the moment, however, Chinese luxury trends are a-changing. In a country where 'bling' was the new black, refined, more elegant styles are making a comeback. So how does this affect Burberry? The traditional camel, red and black check has been seriously blinged out and sold in China, so is this causing less sales? There's also the argument that as the Communist once-a-decade leadership transition is upcoming, people are being more frugal with their expenses, and gift giving is especially uncommon.
It is also argued that all luxury brands are taking a hit, with LVMH (Louis Vuitton Moët Hennessy) falling 3.4%. Although this isn't as bigger drop as Burberry, the future doesn't look bright for luxury brands.
What positives can we fashionistas take from such a devastating blow to our industry? Products that wouldn't be on sale until the holidays are coming into stores fresh for October - victory!
Whatever your opinion on the matter, it's quite a result.
Want more?
Bloomberg
This is Money
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