Debut-day drop for Burberry

INSTITUTIONS that backed the £1.15bn flotation of fashion group Burberry were left with bloody noses today as the shares slumped on their stock market debut.

They slid 2% from the offer price of 230p to 224p. The issue was already at the bottom end of the expected range, so City bookmakers had expected it to trade at least 10p higher than the starting price by the end of the day.

The fall means Italian-American chief executive Rose Marie Bravo's £11.5m stake has already fallen in value by nearly £250,000.

However, brokers praised owner GUS for getting the float away in a turbulent market that has seen a host of share offers being axed.

One trader said: 'You've got to hand it to the GUS management. They've been saying for 12 to 18 months that they'd offload Burberry and they've done it. If they hadn't managed to do it now, they would have come in for some major stick.'

In its capacity as stabilisation manager, Merrill Lynch went into the market to buy shares after they tumbled as low as 219p at one stage.

Investors who were bullish about Burberry said the offer price, of 15 times prospective earnings, was a 40% discount to luxury goods businesses such as Louis Vuitton Moet Hennessy, Gucci and Bulgari.