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Mulberry's profits hit by international investment

Luxury British brand Mulberry’s pre-tax profit dipped during the first half of the year, despite revenues rising as the label invested in international growth.

In the six months to September 30 revenues rose 2% to £78.1m. Retail sales grew 6% to £49.5m with like-for-likes up 4% boosted by international retail revenues soaring 29%.

Pre-tax profits dropped from £10m last year to £7.2m as the business invested in its international expansion. Wholesale revenues also dipped 5% to £28.6m.

Mulberry opened nine new stores and completed its second UK factory, including the training of 240 new staff, during the period. Its production ramp-up is also going to plan.

Chief executive Bruno Guillon said: “The factory is already in production and is expected to be at full capacity by mid-2014, allowing us to achieve our target of making 50% of our handbags in England for autumn 14.”

Sales have continued to rise beyond Mulberry’s reporting period, with retail revenue up 3% for the nine weeks to November 30. International retail also continues to be a highlight with sales rising 49%. However, the downwards trend in wholesale revenues is expected to continue for the full year, as a result of “cautious ordering”.

Guillon said Mulberry was on track to open 15 new stores for the full year, and had recently secured a lease to open a flagship store on Rue Saint-Honoré, Paris in the next financial year. “Located in a key tourist destination, this store will generate global visibility for the Mulberry brand,” he said.

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