Burberry shares have dropped by 11% or 98.3p to 788.3p following today’s update and the suspension of dividend payments, bringing the luxury goods group’s stock to its lowest level since 2010.

Chris Beauchamp, chief market analyst at IG, commented: “This is a classic ‘kitchen sink’ exercise, highlighting the significant challenges facing Burberry in a market where Chinese sales can no longer be taken for granted.”

The FTSE 100 index has fallen more than expected, down 0.6% or 50.86 points to 8202.05.

Other stocks under pressure include BP, which has declined by 5p to 448.5p, and NatWest, down by 3.7p to 319.9p.

Outside the top tier, shares in recruitment firm Robert Walters have fallen by 6% or 22.9p to 359.1p after a weaker-than-expected performance in June.

Some analysts have shared their thoughts on the recent change in Burberry’s CEO, which comes after a 34% drop in profits last year amid a broader slowdown in the luxury market.

The fashion group also reported a disappointing first-quarter update, expecting an operating loss for the first half and announcing the suspension of dividend payments.

Jelena Sokolova, an analyst and luxury goods expert at Morningstar, highlighted several issues. “Burberry has been underperforming in the industry for many years now – this is the second CEO and creative director they’ve had since turnaround efforts began,” she said. “They’ve done well in taking control over distribution and reducing subpar distribution channels in both wholesale and retail. However, with current collections, it appears they have pushed pricing too far and too quickly.”

Sokolova also pointed out problems with Burberry’s product mix, noting that while the brand “still has potential,” it will not be an easy fix.

Chris Beauchamp, chief market analyst at IG, described the situation as a “bombshell” set of announcements. “Sales continued to fall, and no improvement is expected for some time. Additionally, the dividend has been suspended to save money, and the CEO is departing immediately,” he noted.

“This is a classic ‘kitchen sink’ exercise, highlighting the significant challenges facing Burberry in a market where Chinese sales can no longer be taken for granted,” Beauchamp added. “However, given that Burberry is one of the more heavily shorted FTSE shares and is trading at 11 times earnings, there might be a short-term increase in the share price today, as most of the bad news has likely been priced in.