Mulberry warns on profits after tough Christmas trading
Luxury leather goods brand Mulberry has warned that its full year pre-tax profits are likely to be substantially below current market expectations after experiencing tough Christmas trading in the UK and a decline in wholesale sales in Korea.
The group said its total retail sales fell by 3% year-on-year in the 17 weeks to 25 January 2014, which was a reflection of a competitive environment in the UK and substantial discounting in the luxury sector over the Christmas period.
Although retail growth in Mulberry’s international markets continued in December and January with sales rising 40% in the 17 weeks, the group said its UK trading environment had deteriorated in the period while its wholesale channel in the Korean market had been “significantly more challenging” than anticipated.
Mulberry added that in recent days it had become clear that wholesale order cancellations from Korean customers were likely to be “significant” and therefore the group now expects wholesale sales for the year ending 31 March 2014 to be down by approximately 10% on the previous year.
Never Miss a Retail Update!This reduction in wholesale sales is expected to offset the growth in retail sales and Mulberry now anticipates that total sales for the full year to be broadly in line with the prior year.
Bruno Guillon, Mulberry chief executive, said: “Due to tough trading conditions over the Christmas period which saw significant discounting across the market, Mulberry has experienced lower than expected UK retail sales which, together with wholesale order cancellations from Korea, will adversely impact our profit this year.
“Despite this, the company continues to be cash generative and to invest in the ongoing process of transforming Mulberry from a domestic to a global luxury brand, the progress of which is demonstrated by the continued growth in international retail sales.”
