Luxury bag maker Mulberry has revealed the extent of its failed move upmarket, with pre-tax profit in the year to March falling 53 per cent and like-for-like sales in the 10 weeks to June 7 falling 15 per cent.
Mulberry's shares fell 4.3 per cent in early trading on Thursday to 677.5p. They are down 26 per cent this year and 70 per cent off their peak of £23.90 in April 2012.
Godfrey Davis, interim executive chairman, said the company, which has issued multiple profit warnings in the past year and lost chief executive Bruno Guillon in March, was focusing on bags priced less than £1,000.
"We have listened to our customers and are introducing attractive new products in the key £500-£800 price range," he said, adding that the new Tessie collection had been well received. "While the business faces a challenging year, I am confident that we can build on Mulberry's solid foundations and unique brand positioning in the luxury market to restore growth in the medium term."
In 2013, it tried to move upmarket, using more expensive leather and more than doubling prices but suffered due to its image being at the cheaper end of the luxury market.
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> Mr Davis blamed the fall in pre-tax profit from £26m in 2013 to £14m this year partly on costs associated with opening nine new international stores and exceptional non-recurring costs.It is unclear whether Mulberry has reversed its declining fortunes. Retail sales in the 10 weeks to June 7 were 9 per cent below the same period last year, with like-for-like sales down 15 per cent.
<>It is forecasting a double digit decline in wholesale sales for this financial year, after they fell 6 per cent to £54.5m for the year to March 2014. Retail sales were up 2 per cent to £109m but like-for-like sales were down 3 per cent.
Barclays earlier this year slashed its 2015 pre-tax profit forecast for Mulberry from £19m to £11m.
Mr Davis also said other highlights included Mulberry opening its second factory in Somerset in June 2013, the acquisition of a new Paris flagship store due to open in 2015/16 and the implementation of a new supply chain management system.
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