SHARES in Mulberry plunged by more than a quarter yesterday, after the luxury fashion group issued its second profit warning in less that a year, blaming fierce discounting over Christmas and weak trading in Korea.
The group, which has furnished the likes of Victoria Beckham with its designer handbags, said it now expects profits for the year to 31 March to be around £19m, almost £8m, or 30 per cent below, analysts’ expectations.
The news wiped £140m off the value of the company as investors fled the stock.
UK sales fell seven per cent over the crucial eight weeks to 25 January after it lost out to cheaper rivals and was hit by aggressive discounting in the run up to Christmas.
Weak trading in its home market was compounded by a 10 per cent fall in wholesale sales after large order cancellations by overstocked Korean customers.
Mulberry has been struggling to strike a happy medium with prices. Chief executive Bruno Guillon, who joined from Hermes in 2012, has been criticised for pushing up prices in an attempt to shift Mulberry from affordable luxury to high-end designer.
But Guillon said the warning did not mean it would be changing tack.
“The plan stays the same...I think that all this is showing is that we still depend very much on the UK and it has a strong impact on us,” he said.
Mulberry’s aggressive expansion overseas to reduce its reliance on the UK showed signs of paying off with international sales up by 34 per cent in the period.