Shares in British luxury handbags maker Mulberry Group plc (LSE:MUL) dropped by around 20% this morning after the company issued a profit warning.
An unscheduled trading update from the company revealed that its revenue and profit before tax for the financial year ending 31 March 2013 are likely to be below market expectations.
This was put down to weaker than anticipated trading after Christmas. The company stated that its retail sales over the Christmas period were generally in line with expectations, but since then sales have been “disappointing”. Trading has been lower over the last 10 weeks, with a reduction in tourist spending in the brand’s London stores adding to the weaker sales.
Mulberry’s retail like-for-like growth for the full year is now expected to be in the region of 6%.
Meanwhile, wholesale sales for the year ending 31 March 2013 are expected to be down approximately 15% compared to last year. This was attributed to the slimming down of the company’s operations, together with lower than expected in-season ordering.
On a more positive note, the company stated that its order book for autumn/winter 2013 is “building satisfactorily.”
Taking everything into account, Mulberry currently expects its revenues for the year ending 31 March 2013 to be approximately £165m. Profit before tax for the 12-month period is estimated at approximately £26m.
Media reports today said that analysts had been expecting a pre-tax profit of about £31m.
Commenting on its 2012/2013 financial year, chief executive Bruno Guillon said that Mulberry had experienced a year of consolidation after three years of rapid growth. He noted that at present the company is looking to optimise its distribution network and adapt its marketing strategy to drive international brand awareness.
“We continue to reinforce Mulberry’s luxury positioning through an enhanced focus on creativity, craftsmanship and quality,” the chief executive concluded.