Mulberry share price plunges on profit warning

UK: Mulberry share price plunges on profit warning

By Petah Marian | 23 October 2012

Mulberry saw its share price plunge today after the UK luxury brand issued a profit warning today (23 October).

The company blamed the decline on lower wholesale revenue, which it attributed to the rationalisation of its wholesale network and a more challenging external environment in Asia.

The company said that this, combined with the investment being made in international expansion means the group now expects full-year profit to be below last year.

"However, the business continues to be strongly profitable and generate significant cash to fund our future expansion," the company emphasised.

Over the six months to 30 September, the company said revenue increased 6% to GBP76.5m as retail revenue rose 13% to GBP46.5m, rising 7% on a like-for-like basis. Wholesale revenue was down 4% to GBP0m.

The company said UK retail sales increased 10% over the period, with UK full price sales performing in-line with expectations. UK off-price sales were weaker, however this was primarily due to a strategic decision not to make product specifically for the off-price business.

International retail sales, while up 41% over the prior year, but did not meet expectations for the half.

"Mulberry's core UK retail business and key wholesale accounts continue to perform well in the context of a more challenging external environment," said CEO Bruno Guillon.

"Although international retail sales are behind expectations, newly opened stores are performing satisfactorily and we are on track to open our target of 15-20 stores during 2012/13. 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 company's share price was down 25.08% to 989p a share at 10:44BST today

Sectors: Apparel, Finance, Retail