Luxury brand Mulberry has issued another profit warning after incurring charges on stores and the departure of its chief executive.
It is the fourth profit warning in two years and the brand said it expects further “material adverse impact on profit” going ahead as it invests in its turnaround plan of lowering prices.
The brand, famous for its celebrity-endorsed handbags, appointed Godfrey Davis as interim executive chairman three weeks ago after chief executive Bruno Guillon stood down.
Davis said: “Following the recent change in management, we are focusing on achieving sales growth through the reinforcement of our product offering at more affordable prices to meet the expectations of our loyal customers. This will have short-term financial consequences but is necessary to ensure the future strength of the Mulberry brand. The Group remains profitable and cash-generative, giving us the resources to invest for the future.”
Davis has been conducting a review of operations and strategy. Mulberry said the primary objective is to “reinvigorate sales” by the introduction of more affordable new product.
The brand is also slowing the pace of overseas expansion from eight store openings to five in 2014/2015 to control costs. However it insisted it remained “committed” to international expansion.
Mulberry said it expects pre-tax profits of about £14m for the year to March 31.
Mulberry said: “Turnover for the year will be broadly in line with expectations whilst on an underlying basis, profit before tax is expected to be marginally below current expectations.
“Following a detailed review, it has been decided to impair the net carrying value of fixed assets of two US stores, creating a non-cash charge for the year ended 31 March 2014 of £2.7m. This combined with the costs of the recent management change mean that the profit before tax is expected to be approximately £14m.”
Mulberry reported that its new factory in Somerset, which opened last June, is fully operational.