Mulberry warns on profit as it introduces lower prices
In a trading statement issued today, the luxury leather goods brand said its full-year profit will be marginally below expectations.
Following the resignation of chief executive Bruno Guillon last month, interim executive chairman Godfrey Davis has undertaken a strategy review as the company looks to reinvigorate sales with the introduction of more affordable prices.
Following the review, Mulberry has decided to impair the net carrying value of fixed assets of two of its US stores, thereby creating a non-cash charge for the full year of £2.7 million. This, combined with the costs of the recent management change, means that pre-tax profit for the year ended 31 March 2014 is expected to be approximately £14 million. Last year Mulberry delivered profits of £26 million.
The company has confirmed that it will continue to expand overseas although it will only open five stores in 2014/15 compared to eight in the previous year.
Davis added: "Following the recent change in management, we are focusing on achieving sales growth through the reinforcement of our product offering at more affordable prices to meet the expectations of our loyal customers. This will have short term financial consequences but is necessary to ensure the future strength of the Mulberry brand. The group remains profitable and cash generative, giving us the resources to invest for the future."
Mulberry said its new factory in Somerset, which opened in June, is now fully operational.
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