Profit warnings, culled boards and sales slumps are all common headlines for some of the UK's biggest brands. But you need to do a lot more to kill a brand. While a profit warning can send a share into a downward spiral, brand strength is remarkably resilient to adversity, supporting companies when they are underperforming and speeding up their recovery.

Essentially, brand value is determined by analysing a benchmarked performance of parameters that drive and contribute value. These can be awareness, relevance, differentiation, preference and loyalty, market and competitor activity, sales and profitability. It takes time and effort to build a brand, but once a brand is established, it's very difficult to kill it.

Loyalty is a critical factor in building a resilient brand. Brands facing bad news may look like they are in trouble, but from a valuation point of view, a strong emotional attachment with consumers helps prop up brand strength.

Take for instance the retail sector, where some of the leading names have been hard hit by factors such as a fragile economy and a changing retail landscape. The share prices of WH Smith and J Sainsbury have been on a downward trajectory for years, as has that of Marks and Spencer. However, our valuations indicate that the brands of both WH Smith and Sainsbury remain strong.

Frequently retailers underperform not because of brand weakness but because of internal operational issues such as the right products not being on the shelves. For instance, M&S identified the trend for ponchos in March 2004 but didn't get them on the shelves for another four months. Sainsbury in the late 1990s launched an advertising campaign that was so successful its stores ran out of the products it was advertising. But when these operational issues improve, the brand accelerates the recovery process by releasing dormant brand equity which consequently improves the share price. 

Next was formed in 1981 and its formula of designer-style clothes at mainstream prices made it an immediate success. A series of acquisitions and healthy profits impressed the City into inflating the share price to a high of 372p in September 1987. Next, however, had overstretched itself. Too many stores put a strain on cashflow, shop fittings were expensive and debt was uncomfortably high. In 1990 the share price fell to 16p. However, in 1989 when Next's market capitalisation was £500m, we estimate its brand value as being greater by approximately £100m. Consumers still deemed the brand relevant and with new management and fewer stores, the latent brand equity was released stimulating recovery.

Nowhere perhaps has a retail brand proved more resilient than M&S. Despite poundings from the press, sales have remained largely constant since 1997, hovering around £8bn. Despite lower profits and a falling share price, according to our calculations the brand value has actually increased to more than £6bn.

So why are these major brands resilient? The main reason is that brands create loyal followings of customers who retain a preference for the brand even when it doesn't deliver what they want. If a retailer does not get the offer right these customers will not buy, but as soon as this is corrected they will be back. These customers have an emotional attachment to the brand - they like it. This is difficult to measure but our research shows that there are benchmarks that can be used (such as analysis of loyalty card holders).

It's not all good news though. Resilient brands can often be prohibitive to progress. In the spirits industry for example, there has only been three new international brands successfully introduced in the past 100 years - Bailey's, Bombay Sapphire and Malibu. Leading spirit brands are deeply ingrained in social behaviour and almost impossible to dislodge. And brands are also not immortal, as Enron, Arthur Andersen and Ratners proved.

To create genuine brand value brands need constant investment and constant value analysis because when the going gets tough, it's the brand that will expedite recovery.