Billions of pounds were wiped off the value of luxury stocks, with British fashion house Burberry among them.
Shares in the sector tumbled after French giant Kering warned that sales at Gucci, its biggest brand, are down around 20 per cent in the first quarter of the year.
Overall revenues at the company, whose labels also include Yves Saint Laurent and Balenciaga, are heading for a fall of 10 per cent over the three months.
‘This primarily reflects a steeper sales drop at Gucci,’ Kering said, fuelling fears over subdued demand for expensive goods such handbags and coats in China. Kering tumbled 11.9 per cent in Paris.
The rout was echoed across the industry with Burberry falling 3.3 per cent, or 40.5 p, to 1189.5 p in London while Louis Vuitton owner LVMH was down 1.6 per cent in Paris and Cartier parent Richemont lost 2.2 per cent in Zurich.
Fashion fail: British fashion house Burberry fell 3.3% after French giant Kering warned that sales at Gucci are down around 20% in the first quarter of the year
At one point, the slump had wiped nearly £25billion off the value of a sector reeling following a profit warning from Burberry in January amid a slowdown in demand for luxuries.
Florian Ielpo, head of macro research at Lombard Odier Asset Management, warned the industry is ‘beginning to reveal fractures’ and added: ‘The underlying factor is the uncertain state of the Chinese consumer.’
Analysts at Vital Knowledge said: ‘This will raise further worries about the state of consumer spending and China’s economy.’
The FTSE 100 dipped 0.01 per cent, or 0.92 points, to 7737.38, as the FTSE 250 rose 0.27 per cent, or 51.59 points, to 19,484.40.
Stock markets in general struggled for direction ahead of last night’s meeting of the US Federal Reserve where the world’s most powerful central bank was expected to leave interest rates unchanged once again.
Stock Watch – Computacenter
Computacenter, which sells tech services to the public and private sector, enjoyed bumper revenues as big businesses ploughed huge sums into their IT systems.
Annual revenue rose 7 per cent to £6.9billion in 2023, while profits were up 5.1 per cent to £278million.
But shares fell 6.5 per cent, or 190p, to 2752p as the results came in below analysts’ expectations.
The FTSE 250 firm is now looking at how to spend a record cash pile of £459million, with takeovers the most likely option.
Attention will turn to the Bank of England today when it is expected to hold rates at a 16-year high of 5.25 per cent despite a fall in inflation to 3.4 per cent in February.
In London, Rolls-Royce edged up 1.5 per cent, or 6 p, to 406.7 p, having hit an all-time high in the previous session.
Its shares have more than quadrupled in value since the start of last year.
Close Brothers was up 8.8 per cent, or 30.6 p, to 378 p after analysts at Berenberg raised their price target to 470 p from 425 p.
It followed a 4 per cent gain in the previous session when it said it would beef up its finances amid an investigation into the car finance market.
It is feared the scandal, which could see up to 7 m people paid compensation after being mis-sold expensive car loans, will cost the industry billions. Close Brothers is in the firing line.
Greggs fell 0.4 per cent, or 12 p, to 2818 p after it temporarily closed stores as IT issues stopped payments being accepted.
Johnson Matthey, which makes catalytic converters and pollution filters, is selling its medical device components business to Montagu Private Equity for £550million. Shares soared 7.8 per cent, or 132.5 p to 1840 p.
And Investec gained 3.4 per cent, or 16.8 p, to 507.8 p after it said it expects to report profits of between £866.9million and £909.6million for the year to the end of March.
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