HANDBAG maker Mulberry has warned its profits will miss expectations after a post-Christmas slowdown in the luxury goods market.
The Somerset-based firm, whose explosive growth of recent years has made it one of Britain’s biggest export success stories, said sales over the last 10 weeks were disappointing.
Its shares slid 15 per cent after the profits warning, while rival Burberry dropped 4 per cent lower on fears the previously resilient luxury goods sector is feeling the strain of the global economic downturn.
Mulberry said: “Retail sales over the Christmas period were generally in line with expectations.
“However, trading across the retail portfolio during the last 10 weeks has been disappointing, including a reduction in tourist spending in the London stores.”
Annual like-for-like sales growth has slowed from 11 per cent in December to 6 per cent.
It is Mulberry’s second profits alert in the last six months, having warned in October about cautious buying by Asian wholesale customers and the impact of its own actions to improve the quality of its distribution network.
Revenues for the year to March 31 are expected to be in the region of £165m, resulting in profits of around £26m.
Last year, it recorded a 54 per cent jump in pre-tax profits to £36m after a series of upgrades on the back of strong demand for its Alexa bag and Del Rey bag inspired by singer Lana Del Rey.
The company recently announced plans to open a second factory in Somerset to keep up with demand.
Yesterday’s warning is another blow for chief executive Bruno Guillon, who joined the company from luxury brand Hermes in March last year. He said efforts to refine its distribution network were in the long-term interests of building Mulberry into a global luxury brand.
Mr Guillon said: “After three years of rapid growth, Mulberry has experienced a year of consolidation whilst we build the foundations for future growth.
“We continue to reinforce Mulberry’s luxury positioning through an enhanced focus on creativity, craftsmanship and quality.”