Mulberry’s profits beat market expectations as its luxury positioning provided some cushioning against the economic downturn.
The upscale fashion retailer, famed for its iconic handbags, reported pre-tax profits up from £3.5m to £4.2m in the year to March 31. Sales climbed 14 per cent.
House broker Altium Securities believes Mulberry will achieve flat revenues this year, largely due to a fall in wholesale orders.
Analyst David Stoddart said: “There are currency pressures on cost of goods sold but we expect the mix changes to offset these. Costs will increase in response to further expansion, although salaries are being frozen and marketing costs will be contained.”
In the UK so far this year Mulberry has benefited from tourists taking advantage of the weaker pound. UK retail sales in the first 11 weeks of the new year advanced
21 per cent on a like-for-like basis.
Mulberry chairman and chief executive Godfrey Davis said that the group has not been immune to the downturn, particularly in its international markets. “Starting in mid-September 2008 sales slowed in all markets, but the pattern was not uniform, with the US being the hardest hit,” he said.
In May Mulberry reached an agreement with its joint venture partner in the US to take full control of its retail and wholesale operation there, which it hopes will simplify the business and allow the US website to be integrated into the rest of the Stateside arm.
Internationally, in this financial year, Mulberry plans to open three standalone shops in Athens, Qatar and Helsinki Airport.
In the UK Mulberry intends to move its London offices and showrooms because it has outgrown its existing premises. The retailer has also committed to continued expansion in the UK and new product development, such as its Mitzy bag collection that it launched in the spring, which became an immediate best-seller.
Davis said: “Overall we have made a very positive start to the current financial year. However, we remain cautious due to the uncertain economic climate.”