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Mulberry shares slump after weak start to year Mulberry shares slump after weak start to year
(40 minutes later)
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 prior to today 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. 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.
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." 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 ladies' bag, made from ostrich leather and costing £3,500, to the £350 Antony mens' satchel. 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 Hermes, 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. 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 Mulberrys' future prospects were strong, particularly abroad. 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.