Mulberry warns on profit
Mulberry, the luxury handbag and leather goods retailer, has warned that it expects revenue growth and full year profits to be below market expectations, following a fall in wholesale shipments in the six months to end September.
In a trading statement Mulberry said that wholesale shipments dropped 4% to £30 million in the half-year due to a rationalisation in the group’s distribution network overseas and a slowdown of demand from Asia. The group also faced tough half-year comparatives in the period which were boosted by a restocking of the wholesale channel last year.
Mulberry’s total revenue climbed 6% to £76.5 million in the half-year while retail revenue rose 13% to £46.5million and by 7% on a like-for-like basis.
UK retail sales were up 10% with UK full price sales performing in line with expectations. UK off-price sales remained weaker, reflecting a strategic decision not to make product specifically for the off-price business.
The group’s international sales, which are currently a small part of the business, were up 41%, but failed to meet expectations for the first half of the year. However, Mulberry said it remained confident in its international expansion strategy, having recently opened stores in San Francisco, Washington D.C., Berlin and Frankfurt Airport.
The group said its newly opened stores were performing satisfactorily and that it was on track to open a target of 15-20 stores during 2012/13.
Commenting on the results, Bruno Guillon, Mulberry chief executive officer, said: "The steps we have taken to improve the quality of Mulberry's distribution network in both the retail and wholesale channels will result in the short term slowing of sales growth. However, we firmly believe these steps are in the long term interests of building Mulberry into a global luxury brand.
"The Mulberry brand continues to gain recognition globally and we remain very confident in the outlook for the business. We continue to focus on creativity, craftsmanship and quality and in this context will start the construction of our second UK factory within the next few weeks."
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