British luxury brand Mulberry has issued a profit warning after UK retail revenues fell over the Christmas period.
Total retail sales slipped 3% in the 17 weeks to January 25 due to the competitive UK market and substantial discounting across the sector during the festive trading period.
In a trading update the company said pre-tax profit for the year to March 31, 2014 would be “substantially below current market expectations” due to costs from its store opening programme over the last two years and its lower than expected recent sales.
Mulberry said the trading environment in the UK had “deteriorated” and its wholesale operations in Korea were “significantly more challenging than expected”.
Wholesale order cancellations in the country are likely to be “significant” and it expects wholesale orders for the year to March 31, 2014 to be down by around 10%.
The brand’s international markets did however continue to see growth during December and January with sales growing by 40% during the period.
Chief executive Bruno Guillon said: “Due to tough trading conditions over the Christmas period which saw significant discounting across the market, Mulberry has experienced lower than expected UK retail sales which, together with wholesale order cancellations from Korea, will adversely impact our profit this year.
Despite this, the company continues to be cash generative and to invest in the ongoing process of transforming Mulberry from a domestic to a global luxury brand, the progress of which is demonstrated by the continued growth in international retail sales.”