Mulberry issues profit warning despite UK sales up by 10%

23 October 2012 10:51

Luxury handbag and leather goods retailer Mulberry has issued a profits warning after wholesale shipment sales to third parties fell 4% to £30million in the 6 months to September this year. As a result, share prices have gone into freefall as the business now expects to perform below expectations in the year to March 2013.

The decline is said to have been caused, in part, by weaker than anticipated international sales and a slowdown in ordering by franchise businesses in Asia who are remaining cautious in what is a very challenging economic climate. In a statement commenting on these results, Bruno Guillon, chief executive officer, stated that "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." This news comes despite overall retail sales being up 13% to £46.5million in the same period and overall sales showing a 6% rise to £76.5million. In the UK market, which produces the lion's share of overall revenue, retail sales were up 10% compared with the last year. International sales were however below expectation, only increasing 41% despite recent overseas expansion efforts.

The business remains optimistic about its international strategy nonetheless stating that it "…continues to be strongly profitable and generate significant cash to fund future expansion."

Mulberry is set to open 15-20 stores by the end of 2013, having already opened in San Francisco, Berlin, Washington DC and Frankfurt Airport.