The last six months have been terrific for the FTSE 100. The UK’s flagship index has been busy gaining momentum this year as economic conditions improve. And after years of lacklustre returns, British investors are reaping some chunky payouts.
Sadly, not all constituents have been so lucky. Despite overall positive momentum, some firms have been left behind, falling significantly. But could these downward trajectories secretly have created incredible buying opportunities?
Let’s explore the five biggest losers of 2024 so far and determine whether any bargains have emerged.
Should you invest £1,000 in Burberry Group Plc right now?
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Inspecting FTSE 100 losers
Here are those biggest losers of the year to date.
- Burberry Group (LSE:BRBY) – down 48.9%.
- Entain – down 44.4%.
- Ocado Group – down 29%.
- Reckitt Benckiser Group – down 27%.
- Spirax Group – down 24.2%.
Immediately, it’s clear that the losses haven’t been isolated to a single industry. This list of worst performers covers the fashion, leisure, retail, and engineering sectors. And plenty of other businesses from these industries have fared far better. The most obvious example in engineering would be Rolls-Royce, with shares surging over 50% in the last six months.
The catalyst behind the fall of each business is ultimately different. So let’s zoom in to the biggest loser – Burberry – to work out what went wrong and whether now’s a good time to buy.
What’s going on at Burberry?
Being a luxury fashion brand in 2024 isn’t easy. The higher cost of living’s proven to be a significant headwind for luxury retailers as households are more focused on saving rather than spending. However, the firm’s new creative direction doesn’t appear to have resonated with customers either. And the combined impact of these factors is perfectly clear when looking at Burberry’s financial performance.
Sales are down by double digits, and operating profits are on track to miss full-year analyst expectations. So it’s no wonder the stock’s tanking. But on a more positive note, management isn’t blind to what’s going on. And the firm appears to be rethinking its new creative direction to realign its designs toward what core customers are more familiar with.
To oversee this U-turn, the board’s decided on a change of leadership. And after less than three years in the role, Jonathan Akeroyd’s been ousted as CEO, replaced by Joshua Schulman, the former CEO of luxury accessories brand Coach. And his performance while running that business was admirable, driving up bag sales considerably.
Time to buy?
If Schulman can replicate his previous successes at Burberry, snapping up shares at their current price could be an immensely lucrative decision. After all, they’re now trading at a price-to-earnings ratio of just 9.3. However, at this stage, that’s a big “if”.
There’s no guarantee Schulman will be successful, and executing a turnaround strategy could take some time. Personally, I think it’s better to keep Burberry on my watchlist until some signs of progress emerge.
As for the other beaten-down FTSE 100 stocks, investors need to take time investigating what’s dragging down the shares to determine whether they’re bargains or a traps. Even if now might not be the best time to buy, it could reveal potentially interesting opportunities further down the line.
