Investors send luxury firm to naughty step

Elizabeth Fournier
YESTERDAY’S reaction to Mulberry’s slowing growth has a hint of the schoolroom about it. An overachiever for the past couple of years, shareholders greeted the luxury brand’s slip with horror – like a teacher who expresses abject disappointment when their favourite A* student drops a grade.

In markets as volatile as we’ve seen recently, though, the backlash is at least understandable – investors are desperate for consistency and visibly rattled when they don’t get it.

If profits were falling in Mulberry’s key growth markets – emerging markets and particularly Asia – they’d be right to be worried.

But international revenues over the year soared by 61 per cent, contributing significantly to the overall rise of 38 per cent.

The company has been accused of trying too hard to emulate Burberry, which makes 12 per cent of its revenues in China alone, but done well that would be no bad thing – Asian demand for British heritage brands shows no sign of abating and store launches last year in Korea, Singapore, Thailand and Taiwan show that even the core of that market is spreading.

WH Smith, meanwhile, won investor approval despite yet another fall in sales – the struggling pupil who gets a pat on the head just for turning up.

The worst thing Mulberry could do now would be to take the knockback as a sign to lower its expectations.

It may have had a bad term, but it’s far from being bottom of the class.