Mulberry warns on lower FY profit on weak Christmas

ANALYSIS_ Mulberry has warned its annual profit would be "substantially below market forecasts", after heavy discounting over Christmas hurt its UK sales, and its wholesale business was hit by order cancellations. Additionally, recent wholesale order cancellations from Korea are

expected to significantly affect the final figures, with the company now foreseeing wholesale sales for the year ending March, 31 to come in 10 percent lower than the last year.

Analysts

following the stock highlight that the reduction in wholesale sales is likely to offset the growth in retail sales, hence dragging total sales for the company's current fiscal year (to March, 31) to the same level of that of the previous year.

Mulberry said on Wednesday total retail sales for the 17 weeks to January 25 were 3 percent below a year ago. Analysts had been expecting Mulberry to post a pre-tax profit of 26.9 million pounds for the full year to the end of March, according to data compiled by Reuters.

Poor Christmas trade leads Mulberry to low FY trading update

Luxury brand Mulberry Group Plc. (MUL.L), in its trading update, reported a 3 percent year-on-year decline in total retail sales, excluding the sample sale, moved from November to February, for the 17 weeks ended January 25, 2014. This is reflects the competitive environment in the UK, with substantial discounting in the sector over the Christmas trading period, point out market insiders.

The company advanced that, the lesser wholesale sales in combination with the committed costs associated with the store opening programme undertaken over the last couple of years, will result in lower-than-anticipated sales and pre-tax profit for the year ending March 31, 2014 being substantially below current market view.

"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 on-going 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," summed up Bruno Guillon, CEO at Mulberry.