The British fashion brand Mulberry had to issue a profit warning for the third time in a year. According to the brand this caused by tourists coming to Europe and especially London, who stopped buying Mulberry en masse. In December sales went smoothly, but since the new year they are slacking. At the stock exchange Mulberry's shares have lost almost half its value over the past twelve months.
Lower sales drag down profits
Mulberry currently believes sales for the financial year 2013, which ends in March, will be limited to 165 million pound (193 million euro), mainly due to the decline in wholesale activities by 15%. Financial analysts had expected sales of 175 million pound (205 million euro). Last financial year the accounts closed with a record of 168 million pound (197 million euro).
Profitability is also affected by this turnover decrease: the company is counting on a gross profit of 26 million pound (30 million euro) for the financial year 2013, well below the expectations of 30.7 million pound (36 million euro) and about a third below the 36 million pound (42 million euro) earned last year.
To turn the tide, CEO Bruno Guillon wants to put more effort into tactical international marketing. He believes Chinese tourists coming to London and Paris should already know the brand and its brands of luxury bags like Baywater and Alexa before they leave for Europe. Guillon also wants to open up twenty new locations, all overseas.
The profit warnings follow three years of strong growth. Guillon, who joined the company from Hermès last year, believes this is a year of consolidation, which will be the foundation of future growth.