Mulberry has issued a profit warning after a plunge in revenues in the face of “continuing headwinds affecting the luxury sector”.
The warning comes as Burrberry also warned on its outlook, despite rising sales in its first half. Burberry total revenues came in at £1.1bn for the six months to 30 September, with sales in its retail arm up 8%, but it warned it had experienced “some softening” in sales growth from its Chinese customers.
Mulberry, the luxury handbag maker, expects its profits to be “significantly below” previous forecasts after sales for the six months to September 30 fell 17% to £64.7m.
Mulberry’s latest warning comes after it launched a turnaround plan following a turbulent year in which its chief executive quit following a series of profit warnings.
Bruno Guillon left in March after the failure of his risky strategy of raising prices to appeal to more well-heeled shoppers.
Mulberry executive chairman Godfrey Davis said he is confident he can build on the company’s “solid foundations and unique brand positioning” to restore growth.
Davis said: “As I explained in June, my first actions on returning as acting chief executive focused upon reinforcing our product ranges.
“I explained that the impact would be progressive and should produce benefits over the medium term. The new products are beginning to reach our shops with the launch of the Cara Delevingne bags at the beginning of September and with further new product being offered in our shops during November.”
During Mulberry’s first half retail business sales fell by 9% to £45.1m with a decline in the UK offset by growth in international markets.
UK full-price sales were down £2.7m, or 12%, to £20.9m after a decline in footfall, particularly among tourist shoppers.
However, international retail sales increased by £1.2m to £7.5m and online sales nudged up £0.1m to £6.6m, accounting for 10% of group sales.
Mulberry is in the process of investing significant amounts of capital in order to accelerate investment in new stores in order to prepare for the next phase of growth in Europe and North America.