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Mulberry shares slump after weak start to year | Mulberry shares slump after weak start to year |
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Asia's insatiable demand for luxury goods has created 300 new jobs in Somerset as the upmarket retailer Mulberry confirmed plans to open a new manufacturing site in the West Country, but shares in the group slumped after annual figures revealed a slowdown in sales. | Asia's insatiable demand for luxury goods has created 300 new jobs in Somerset as the upmarket retailer Mulberry confirmed plans to open a new manufacturing site in the West Country, but shares in the group slumped after annual figures revealed a slowdown in sales. |
Mulberry stock, which before Thursday had increased in value by 35% this year, shed 22% in early trading after annual profits fell short of expectations by more than £1m and a 38% growth in revenues for the year to 31 March was immediately pegged back by the admission that retail sales – from its own stores, department store concessions and online – had grown by just 12% over the past 10 weeks. | |
The retail analyst Nick Bubb said the start to the new financial year had overshadowed a "fantastic" 2011. He added: "The outlook statement with today's results is surprisingly cautious." | |
Mulberry products range from the Bayswater women's bag, made from ostrich leather and costing £3,500, to the £350 Antony men's satchel. | |
Undeterred by the figures, the group also announced a ramp-up in its international expansion, underpinned by a bolstering of its UK manufacturing base with the opening of its second Somerset factory and consolidating its position as the country's largest maker of high-end leather goods. Mulberry, whose latest product is the Del Rey bag, inspired by the American singer Lana Del Rey, said revenues had grown by 38% to £168.5m in the year to 31 March, generating a pre-tax profit of £36m. The Asia-Pacific region, where Mulberry operates with a partner, saw sales surge by 70%. | Undeterred by the figures, the group also announced a ramp-up in its international expansion, underpinned by a bolstering of its UK manufacturing base with the opening of its second Somerset factory and consolidating its position as the country's largest maker of high-end leather goods. Mulberry, whose latest product is the Del Rey bag, inspired by the American singer Lana Del Rey, said revenues had grown by 38% to £168.5m in the year to 31 March, generating a pre-tax profit of £36m. The Asia-Pacific region, where Mulberry operates with a partner, saw sales surge by 70%. |
The UK, however, remains Mulberry's main market and saw like-for-like revenues, stripping out new store and concession openings, rise by 27%. Growth appeared to have faltered in the opening weeks of the new financial year, with the 12% growth figure that so alarmed analysts including a like-for-like sales rise of just 3% in the 10 weeks to 9 June. | The UK, however, remains Mulberry's main market and saw like-for-like revenues, stripping out new store and concession openings, rise by 27%. Growth appeared to have faltered in the opening weeks of the new financial year, with the 12% growth figure that so alarmed analysts including a like-for-like sales rise of just 3% in the 10 weeks to 9 June. |
Mulberry said it was wary about the current state of the market, issuing an outlook that rattled investors who are used to regular double-digit increases in demand from emerging markets. "We remain cautious as a result of the adverse macro-economic climate," said the group. | Mulberry said it was wary about the current state of the market, issuing an outlook that rattled investors who are used to regular double-digit increases in demand from emerging markets. "We remain cautious as a result of the adverse macro-economic climate," said the group. |
Bruno Guillon joined Mulberry as chief executive from Hermès, the French luxury brand, in March. Guillon said in a statement on Thursday that he had joined Mulberry at a very exciting time. "The opportunity for the Mulberry brand is significant, with the profits earned from its strong domestic position supporting the increasing pace of international expansion," he said. | |
"The challenge for the next few years is to build upon the solid foundations that have been laid, seize the international opportunity in a way that maintains the careful positioning of the brand within the luxury market, whilst continuing to make the enduring quality of our products central to everything we do." | "The challenge for the next few years is to build upon the solid foundations that have been laid, seize the international opportunity in a way that maintains the careful positioning of the brand within the luxury market, whilst continuing to make the enduring quality of our products central to everything we do." |
Experts have predicted that Mulberry's sales could treble over the next five years to more than £500m. Analysts at Bain & Co, however, have picked up on signs of a slowdown in China and warned in a report last month that sales of luxury products there may slow next year, albeit followed by a resurgence in 2014. Demand from Asia remains strong nonetheless. | Experts have predicted that Mulberry's sales could treble over the next five years to more than £500m. Analysts at Bain & Co, however, have picked up on signs of a slowdown in China and warned in a report last month that sales of luxury products there may slow next year, albeit followed by a resurgence in 2014. Demand from Asia remains strong nonetheless. |
Mulberry said sales to partner stores and wholesale customers in the Asia-Pacific region grew by 70% over the period to £25.1m. The company said it was targeting up to 20 international store openings. According to Thursday's results, international sales grew by 61%. | Mulberry said sales to partner stores and wholesale customers in the Asia-Pacific region grew by 70% over the period to £25.1m. The company said it was targeting up to 20 international store openings. According to Thursday's results, international sales grew by 61%. |
Philip Dorgan, a retail analyst at the City brokerage Panmure, described the results as a "slight miss" after profits came in £1m below expectations, but said extra costs such as a fully funded appearance at British fashion week had to be absorbed in 2012. Dorgan said Mulberry's future prospects were strong, particularly abroad. | |
"We believe that the next few years will see the Mulberry brand significantly extend its global reach," he said. "Its design team has developed an outstanding product that appeals to a broad range of consumers, built upon strong existing craftsmanship and quality connotations. We expect strong product development to accelerate this momentum." | "We believe that the next few years will see the Mulberry brand significantly extend its global reach," he said. "Its design team has developed an outstanding product that appeals to a broad range of consumers, built upon strong existing craftsmanship and quality connotations. We expect strong product development to accelerate this momentum." |
Mulberry said on Thursday that it would open a second factory in Somerset, doubling its UK capacity and creating 300 jobs. The £7.5m project in Bridgwater, which is being supported by the regional growth Fund, comes less than a year after it completed the extension of its existing factory at Chilcompton, also in Somerset, creating 60 new jobs. | Mulberry said on Thursday that it would open a second factory in Somerset, doubling its UK capacity and creating 300 jobs. The £7.5m project in Bridgwater, which is being supported by the regional growth Fund, comes less than a year after it completed the extension of its existing factory at Chilcompton, also in Somerset, creating 60 new jobs. |