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LONDON — Big spenders from the East — and various other parts of the world — stayed away from Mulberry’s London stores in the first two months of 2013, forcing the brand to issue its second profit warning in six months.
This story first appeared in the March 25, 2013 issue of WWD. Subscribe Today.
On Friday, Mulberry Group plc released an unscheduled trading update saying revenues and profits before tax for the fiscal year ending March 31 would be below market expectations. The stock closed down 16.9 percent at 10.26 pounds, or $15.49 at current exchange.
The company said retail sales over the Christmas period were generally in line with expectations. It blamed the slowdown on weaker-than-anticipated sales following the Christmas season, and added that business across the retail portfolio during the last 10 weeks had been “disappointing” due to a reduction in tourist spending in the London stores.
“They’re not coming into our stores,” said chief executive officer Bruno Guillon in a telephone interview. “I don’t know what is happening with tourists at other stores, but I do know that we need to continue to push and expand outside the borders of the U.K. We have to build an international network of Mulberry stores and create more brand awareness worldwide. I know our Made in England label will be successful outside the U.K.”
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Guillon said 15 to 20 stores will have opened in the current year and the brand would continue to hit that target over the next four to five years. The U.K. is Mulberry’s biggest single market, although exports are growing rapidly.
For the past few years, high-spending foreign tourists — from China, Africa, Brazil, Thailand, Indonesia and the Middle East — have been bolstering sales of luxury goods in London and other cities across recession-stricken Europe, and acting as a much-needed counterweight to sluggish domestic demand.
Mulberry’s retail like-for-like growth for the year is expected to be in the region of 6 percent, while wholesale sales for the year ending March 31 are now expected to be down about 15 percent compared with last year, due to strategic rationalization of that channel, and lower-than-expected in-season ordering.
The company said, however, that the order book for fall 2013 is building “satisfactorily.”
Mulberry said it currently expects revenues for the fiscal year to be about 165 million pounds, or $249.8 million, and profit before tax is expected to be about 26 million pounds, or $39.4 million. All figures have been converted at current exchange rates.
Last October, shares in Mulberry plummeted more than 25 percent on the London Stock Exchange following the company’s announcement that a slowdown in demand among the brand’s Asian wholesale clients would dent year-end sales and profits.