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Mulberry issues profit warning

Mulberry has issued a profit warning after a slowdown in wholesale revenues.

In the six months to September 30, wholesale shipments to third parties were down 4% to £30m, as a result of a more challenging environment in Asia. However total revenue rose 6% to £76.5m and retail revenue jumped 13% to £46.5m as like-for-like sales surged 7%.

In a trading statement Mulberry said it had made the decision to rationalise some international wholesale accounts in order to improve the distribution network.

Mulberry said now expects group revenue growth for the year to March 31, 2013 to be below market expectations. Full year profits will be below last year’s as a result of these declines and investment in its international retail arm.

Although the luxury brand did not confirm its new anticipated target, analyst firm Espirito Santo noted that it would have to be a decline of at least 16% on current consensus forecasts of £43m to come in under last year’s figure of £36m.

Chief executive Bruno Guillon added: “The steps we have taken to improve the quality of Mulberry’s distribution network in both the retail and wholesale channels will result in the short term slowing of sales growth. However, we firmly believe these steps are in the long term interests of building Mulberry into a global luxury brand.”

In the UK retail sales were up 10% and Mulberry said UK full price sales performed in line with its expectations. Off-price sales in the UK have remained weaker, which the brand said reflects a strategic decision not to make product specifically for the off-price business.

International retail sales were up 41%, and although the company has not met its expectations for the first half of the year it remains confident in the international expansion strategy.

Guillon said newly opened stores are performing “satisfactorily” and Mulberry is on track to open its target of 15-20 stores during 2012/13.

He added: “We continue to focus on creativity, craftsmanship and quality and in this context will start the construction of our second UK factory within the next few weeks.”

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