29th Jan 2014 07:54
LONDON (Alliance News) - Luxury goods provider Mulberry Group PLC Wednesday issued a profit warning after reporting a fall in retail sales in the last 8 weeks as it was hit by the discounting seen in the UK sector over Christmas, and a challenging Korean wholesale market.
The maker of women's bags, clothes and accessories, among other luxury items, said total retail sales fell 3% in the 17 weeks to January 25, even though its international retail sales were up 40% over the period. Total retail sales had been up 3% in the nine weeks to end-November, but then fell 7% in the following 8 weeks.
"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 which, together with wholesale order cancellations from Korea, will adversely impact our profit this year," Chief Executive Bruno Guillon said in a statement.
The company warned that it now expects total sales for the year to end-March to be broadly in line with the previous year as a fall in wholesale sales offsets overall growth in retail sales.
"In recent days it has also become clear that wholesale order cancellations from Korean customers are likely to be significant and we now expect wholesale sales for the year ending 31 March 2014 to be down approximately 10% compared to last year," the company said.
"In combination with the committed costs associated with the store opening programme undertaken over the last two years, the lower than anticipated level of sales is expected to result in profit before tax for the year ending 31 March 2014 being substantially below current market expectations," it added.
CEO Guillon said Mulberry is still cash generative and will continue investing in turning itself into an international brand.
By Steve McGrath; [email protected]; @SteveMcGrath1
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