SHARES in Mulberry lost almost a quarter of their value yesterday after the company became the latest luxury fashion brand to warn on profit.
The handbag and leather goods maker said that while British retail sales were meeting expectations, a slowdown in international sales and it decision to shrink its wholesale network meant full-year profits would miss expectations.
The Aim-listed group predicts pre-tax profits in the year to March 2013 will fall below the £36m posted last year, compared with a consensus forecast for about £43m.
The news echoes the recent profit warning by larger competitor Burberry, which said there was a broad-based slowdown in spending, particularly in China.
Finance director Roger Mather blamed the profits warning on lower than expected international sales and a shortfall on wholesale
Bruno Guillon, the former Hermes boss who replaced Godfrey Davis as chief executive in March, has been cutting back on the number of multi-brand shops that sell its products in Europe to shift sales to its own shops.
“Cutting out those wholesale accounts clears the way for future growth. It’s doing the right thing even if we a being beaten up for it today,” Mather said. He warned that it would wipe £5m off full-year sales.
Overall, retail revenue rose 13 per cent to £46.5m in the six months to 30 September and was up seven percent on a like-for-like basis. UK retail sales were up 10 per cent while international retail sales rose 41 per cent, below expectations.