Luxury brand Mulberry has issued a surprise profit warning this morning, after Christmas trading in the UK got worse and wholesale cancellations in Korea were worse than anticipated. Shares have nosedived on the news, currently down well over 25 per cent.
The fashion house, which has furnished the likes of Victoria Beckham and Katherine Jenkins (above) with handbags, saw sales drop seven per cent in the eight weeks to 25 January, as the store battled with a "competitive" festive climate in the UK and "substantial" discounting.
Mulberry's been struggling to strike a happy medium when it comes prices. Chief executive Bruno Guillon, who moved from Hermes in 2012, has been criticised for pushing up prices in an attempt to shift Mulberry from affordable luxury to high-end designer.
Pre-tax profit, said the group, will be "substantially below current market expectations". A poll of analysts by Reuters had pointed to profit of £29.6m for the current financial year.
International sales remained buoyant, however, up 34 per cent in the period.
Guillon, chief executive officer, commented:
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.
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.