By Sruthi Shankar and Johann M Cherian
(Reuters) -UK’s blue-chip FTSE 100 index closed lower on Thursday following a three-day run of gains as Burberry tumbled after it said it would struggle to meet revenue targets if a slowdown in luxury spending continued.
Burberry’s sank 11.1%, its biggest one-day percentage loss since September 2012, and dragged on European luxury peers including LVMH and Kering.
The company reported a sharp slowdown in comparable store-sales growth in its second quarter to 1%, down from 18% in the first, as growth in China evaporated.
“Burberry’s warning off the back of a sharp slowdown in sales is the latest sign the luxury goods sector is not immune to an uncertain economic backdrop,” noted Russ Mould, investment director at AJ Bell.
“All it can do right now is protect and invest in its brand and wait for an improvement in the backdrop.”
The FTSE 100 dropped 1.0%. The index had scaled a near one-month high on Wednesday after easing inflation figures in October fuelled hopes that the Bank of England may not have to tighten monetary policy further.
Investors added to their bets on BoE rate cuts next year, with three 25-basis-point reductions by December 2024 almost fully priced in.
The midcap FTSE 250 index slid 1.7% after rallying to a two-month high a day earlier.
Hotel Chocolat’s shares more than doubled and hit a one-and-a-half year high after the specialist chocolatier agreed to a 534 million pound ($662 million) takeover offer from Mars Inc.
Meanwhile, Shell, Hargreaves Lansdown and B&M European Value fell as they traded sans dividend.
International Distributions Services shed 3.8% after the Royal Mail owner said it expects full-year adjusted operating performance to be around breakeven.
Halma Plc gained 3.2% after the technology firm posted record half-year revenue.
Crest Nicholson slipped 2.3% after lowering annual profit expectations, while CAB Payments gained 3.1% after the payments processor pledged to some investors that it will hit its revised annual revenue target.
(Reporting by Sruthi Shankar and Johann M Cherian in Bengaluru; Editing by Varun H K, Shinjini Ganguli, William Maclean)