Once a trendsetter in both the fashion world and the stock market, Burberry’s recent financial decline has resulted in the British luxury brand’s imminent exit from the FTSE 100.

Burberry shares have plummeted nearly 30% over the past three months, currently valuing the company at £2.5 billion. This is significantly lower than the market capitalization needed to maintain its position when the quarterly reshuffle of the senior share index is revealed next week.

The luxury retailer has been hit hard by a global dip in demand for high-end goods, impacting other brands like Kering’s Gucci and Balenciaga, and Mulberry. “In the immediate term, it will drop out a lot of index funds and index trackers will have to sell Burberry. In the very short term, the share price will be under pressure,” said Joachim Klement, an analyst at Liberum.

In the UK, approximately 20% of all equities are held in tracker funds, most of which track the FTSE 100. When a company is removed from the index, these funds automatically sell shares in that company. Preliminary quarterly changes to the index will be announced on Tuesday, based on that session’s closing prices.

Burberry issued a profit warning in July, its third this year, and dismissed Jonathan Akeroyd as its CEO.

Other companies at risk of falling out of the FTSE 100 include EasyJet, which has seen shares drop over 10% this year due to decreased travel demand and rising input costs. Mike Ashley’s Frasers Group is also at risk, with a market cap of £3.9 billion.

Hiscox, the Lloyd’s of London insurer, might return to the FTSE 100 after a year in the FTSE 250. Shares in Hiscox have surged 13% since early 2024 amid takeover speculation from Japan’s Sompo Holdings Inc and Italy’s Assicurazioni Generali Spa.

Raspberry Pi, which debuted on the stock market in June, is expected to join the FTSE 250. Its share price has increased by 9%, giving the mini-computer maker a market value of £789.5 million.

Final index changes will be announced on September 4. Klement noted Burberry’s situation was clear-cut due to its significantly undervalued status. “With all the other stocks, they are really borderline. A week of strong performance in the share price will keep them in,” he said.

Burberry has suspended its dividend and plans to cut around 400 UK jobs as part of its cost-cutting measures. Beyond the luxury sector’s struggles, the company has been trying to revive its brand under various leaders.

Akeroyd aimed to elevate Burberry from mid-market to high-end during his tenure. Now, Burberry has appointed Joshua Schulman, an American with a background in affordable luxury, to lead the brand, hinting at another strategic shift.

Klement commented, “In the long run, I don’t think the reshuffle has much of an impact because ultimately, Burberry’s fate lies in the hands of the current management and their ability to execute a turnaround.”