Luxury handbag maker Mulberry said it is still searching for a new creative director having failed to fill the role vacated by the highly respected Emma Hill, who announced her departure six months ago.
The group announced a 28 per cent slide in pre-tax earnings to £7.2m for the six months to the end of September.
An impressive four per cent increase in like-for-like retail sales was wiped out by a five per cent drop in wholesale revenues, driven by lower orders in Europe and the cost of overseas expansion.
The group is investing in international markets to help it ride out the economic gloom in UK and Europe.
Mulberry, which has stores in Leeds, Sheffield and York, announced that a new flagship Paris store is due to open in 2014/15.
The company was shaken by the announcement of Ms Hill’s departure earlier this year, which sent the group’s shares tumbling.
She was credited with transforming the firm from a traditional briefcase and wallet maker into an international fashion powerhouse with a clutch of celebrity fans.
The company admitted that it was continuing the search for a new creative director, but that design and product development teams are working on “the seasonal refreshment of our collections as usual”.
UK total retail sales climbed five per cent while international sales in Mulberry’s own stores were up by 29 per cent.
Total first half revenue rose two per cent to £78.1m. The profits decline mirrored a similar fall in the full-year.
Mulberry said it faced increased competition from mid-market brands, which hit its lower-priced handbags, but new products in the £1,000-plus range are doing well, demonstrating the “ability to attract a high-end luxury customer”.
It has completed the construction of a new factory in Somerset and is training 240 new staff.
The site is expected to be at full capacity by mid-2014, meaning Mulberry will be making 50 per cent of its handbags in England for the autumn/winter season.
The company said it expected the lower retail sales trend to continue for the rest of the financial year to the end of March.
In the nine weeks to November 30, total retail sales rose three per cent, below the six per cent trend for the half-year.
It indicated total investment for the year at £19m, adding: “We continue to focus on the transition of Mulberry from a UK success story into a global brand.”
Despite the downturn shoppers have continued to flock to Mulberry’s outlets thanks to Ms Hill’s emphasis on celebrity endorsements.
It was her idea to create the best-selling ‘Alexa’ and ‘Del Rey’ bags, named after TV presenter Alexa Chung and singer Lana Del Rey.
There is anxiety over whether the momentum can continue without Ms Hill, who reportedly left over creative disagreements with management.
Ms Hill, who was made a CBE last year and left the company in the autumn, completed her work on next year’s spring/summer collection.
Bruno Guillon, Mulberry’s chief executive who joined from French luxury brand Hermes last year, said: “It is important to not forget our project to transform this UK success story into a worldwide success.
“We are facing challenges but we are still growing and we are encouraged by our international growth and our margin improvement.”
He said boosting the brand’s profile in Asia would also help sales to Asian tourists visiting Europe and the US as well as growing its local business.
“Chinese shoppers, for instance, need to see us in Asia but also see us in the right locations when they travel abroad,” he said.
Five partner stores have opened in Korea with others in Singapore, Shanghai, Beijing, Nagoya and Bahrain.
Mulberry plans to open another 15 stores over the coming year.