MARKET REPORT: Burberry exodus continues as investors check out with the fashion firm struggling in the US

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Investors continued to check out of Burberry as Britain’s biggest luxury brand felt the lingering effects of a damning broker note warning that the business was ‘approaching maturity’.

Shares in the firm which is most famous for its trenchcoats, cashmere scarves and ponchos, fell 18p to 1181p dragging down smaller rival Mulberry (0.5p lower at 934.75p), which reports half-year results today.

Both are exposed to the slowdown in Asia. Two-thirds of Burberry’s revenues is from areas which are seeing big falls in growth. Asia Pacific and the Americas both showed sharp declines in the second quarter.

Approachng maturity: British models Cara Delevingne, Jourdan Dunn and Edie Campbell pose for Burberry which has seen investors checking out after a damning broker note

Burberry has been a high growth stock for 15 years but is still rated as such despite sales slowing, said Tom Gadsby, an analyst at broker Liberum.

Investors digesting Monday’s note were spooked by concerns the valuation does not yet take into account a list of risks. Top of the pile is the firm’s over-exposure to China.

Liberum estimates 38 per cent of Burberry’s global sales are to Chinese customers, versus an industry norm of 30 per cent. The greatest surprise of the recent round of reporting from Burberry was US weakness and there is no clear consensus as to the reason.

Gadsby said: ‘That Burberry should see a sharp slowdown in Asia from the first quarter to the second was to be expected, but that the US should see an even bigger reversal was not.

‘More worryingly, there is little understanding across the sector of what is causing the US slowdown. If the downturn is prolonged we believe that Burberry will find it tough to meet market expectations.’

Economic indicators do not suggest an imminent recovery.

The extent of the problems became clear at the half-year update which shocked the market. Sales from the same number of stores in the first quarter swung from +6 per cent to -4 per cent in the second quarter.

Sales were lower than expected across every region, but sharply negative in both Asia and the Americas.

Liberum says the interims on November 12 did little to reassure it that Burberry’s challenges will be short-lived.

The story at Mulberry, which attempted to crack the luxury market by hiking prices and failed, is little better.

It issued a series of profit warnings and has seen a raft of management changes at the top. Half-year figures are expected to show a fall in revenues to £75.1million from £83.9million.

Disappointment from the retailers was mitigated by the miners. A sharp rise in prices of oil and metals boosted commodity stocks helping the FTSE100 index of leading stocks finish 8.54 points lower at 6126.68 after dropping 1.4 per cent in the previous session.

Brent crude rallied above $41 a barrel at one stage yesterday, having slumped below $40 for the first time since February 2009 on Tuesday.

This helped the miners bounce back from the falls seen the previous day.

Glencore was up 3.6p to 83.1p, while Rio Tinto increased 73.5p to 1966.5p, BHP Billiton rose 26.6p to 749.4p. Meanwhile, BG Group added 23.7p to close at 985.2p.

The only casualty was Anglo American, down 3.95p to 319.7p, as shareholders took in Tuesday’s decisions to suspend the dividend and lay off thousands of workers. The 1.2 per cent fall was a new record low for the firm.

Stateside, the £79.1bn merger talks between Dow Chemical and DuPont to create a chemicals giant boosted the Dow Jones Industrial Average early on before an afternoon decline kicked in.

On the currency markets, the pound was stronger after suffering from Tuesday’s weak manufacturing figures. It rose to $1.52 and 1.38 euros.

Top of the FTSE leader board was Ashtead, which rents out equipment to the construction industry. It was up 89p to 1120p after saying that it expects full-year results will beat forecasts.

It also posted a 21 per cent rise in first-half profit and hiked its dividends.

The biggest faller of the FTSE250 Index was bus and train firm Stagecoach, down 51.4p to 304.7p,

It blamed the terrorist attacks in Paris for the fact that fewer passengers travelled in big cities on public transport, and downgraded its full-year guidance.

The top riser of the FTSE250 was Peppa Pig owner Entertainment One which went on a charm offensive to reassure shareholders about a refinancing deal.

The shares had lost almost a third of their value in the wake of the announcement last week but bounced up 16.5 per cent or 23.2p to close at 164.1p.