Mulberry has sent out a profit warning for its current fiscal year. It has had to give extensive discounts during the holiday period in Great Britain and its South Korean sales were much weaker.
UK and Korean problems
Mulberry has announced that its retail turnover in the quarter leading up to 25 January is 3 % lower than a year ago. The final 8 weeks of that quarter, including the holiday period, even saw turnover drop 7 %.
“Mulberry has experienced lower than expected U.K. retail sales which, together with wholesale order cancellations from Korea, will adversely impact our profit this year", CEO Bruno Guillon said.
Analysts had expected pretax profit to reach 32.7 million euro, but Guillon told Reuters that the company is predicting a 23 million euro profit.
Looking for more exclusive image
The bad results are bad news for Guillon, as he aims to transform Mulberry from an ‘affordable luxury’ brand to a more exclusive image. That is why it is now using better (and more expensive) materials. This leads to higher prices, which in turn have impacted sales negatively.
"Mulberry bags sold well at 800 euro, but no one wants one at 2,000 euro”, a retailer told Exane BNP Paribas analysts.