17th Apr 2014 07:33
LONDON (Alliance News) - Luxury goods maker Mulberry Group PLC Thursday said that its pretax profit for the financial year just ended will be marginally below expectations.
Its the fourth time in two years that the British fashion company has lowered its profit expectations. Mulberry said that it expects its underlying pretax profit for the financial year to March 31, to be around GBP14 million. This compares with a pretax profit of GBP26.0 million the prior year. It said that revenue for the year will be "broadly in line" with expectations.
Mulberry said that its profit for the year will be dragged down by a GBP2.7 million impairment charge it booked during the period, on the net carrying value of two of its stores in the US, as well as pay out costs to former Chief Executive Bruno Guillon, who left the company last month.
The luxury bags, clothes and accessories maker came under scrutiny under the control of former CEO Guillon, as the fashion company priced itself out of the market, by raising its prices at a quicker rate than consumers wanted to pay for them.
Mulberry announced the Guillon's departure with immediate effect in March, a decision that came less than two months after the luxury goods provider issued another profit warning, having reported a fall in sales as it was hit by the discounting seen in the UK sector over Christmas and by a challenging Korean wholesale market.
Mulberry said that it will focus on introducing more affordable prices, in an attempt to reinvigorate sales and encourage consumers to fork out cash for its products again.
"Following the recent change in management, we are focussing on achieving sales growth through the reinforcement of our product offering at more affordable prices to meet the expectations of our loyal customers," said Interim Executive Chairman Godfrey Davis in a statement.
"This will have short term financial consequences but is necessary to ensure the future strength of the Mulberry brand," he added.
Mulberry has also put the brakes on international expansion, by slowing the rate of its own store openings for the year ahead, targeting only five, compared with eight in the year just ended, so it can focus on controlling costs whilst its existing stores gain traction, it said.
Mulberry shares were down 3.5% at 684.50 pence in early trading Thursday.
By Rowena Harris-Doughty; [email protected]; @rharrisdoughty
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