British fashion label & retailer Mulberry has today issued a profits warning following disappointing international retail sales.
Wholesale shipments declined by four per cent in the six months to September 30th 2012 to £30 million, reflecting a challenging external market in Asia and tough half year comparatives and as such the group now expects full-year growth to fall short of predictions.
A statement from the group said: “Primarily due to lower wholesale revenue, Mulberry now expects Group revenue growth for the year to 31 March 2013 to be below market expectations.
“As a result of this, combined with the previously highlighted investment being made in international retail expansion, we now expect full year profits to be below last year.
“However the business continues to be strongly profitable and generate significant cash to fund our future expansion.”
Last month, British fashion giant Burberry also issued a profit warning as a deceleration in sales and ongoing external economic uncertainty affected sales, a surprising announcement given the supposed resilience and popularity of the luxury market.
Also last month, a report by the New West End Company and Heart of London Business Alliance with the support of real estate firm Jones Lang Lasalle revealed that annual spend in the luxury quarter of London’s West End, which includes Regent Street, Oxford Street and Bond Street, has reached £3 billion despite widespread financial woes.
During its first half period, total retail sales at Mulberry grew 13 per cent compared with the same period last year while UK retail sales increased 10 per cent, in line with expectations.
The group also saw total revenue improve, climbing six per cent to £76.5 million, proving that there is still interest in its products despite the slowdown.
Bruno Guillon, Mulberry CEO, said that the brand has opened new stores in recent months which are trading “satisfactorily” despite the international retail sales drop and added that it is on course to open its target to 15 to 20 stores in 2012/13.
He added: ““Mulberry’s core UK retail business and key wholesale accounts continue to perform well in the context of a more challenging external environment.
“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.”