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Mulberry pins third profit warning on thrifty tourists Mulberry pins third profit warning on thrifty tourists
(6 months later)
Mulberry shares have plunged by nearly a fifth after the fashion and handbags business issued a third profit warning in a year, blaming a fall in profits on lower spending by tourists in London after Christmas.Mulberry shares have plunged by nearly a fifth after the fashion and handbags business issued a third profit warning in a year, blaming a fall in profits on lower spending by tourists in London after Christmas.
The Somerset-based luxury label, famous for its trademark Bayswater and Alexa bags – which start at £800 and go up to £4,500 for versions in ostrich leather – said full-year profits would not meet market expectations due to "disappointing" trading over the past 10 weeks.The Somerset-based luxury label, famous for its trademark Bayswater and Alexa bags – which start at £800 and go up to £4,500 for versions in ostrich leather – said full-year profits would not meet market expectations due to "disappointing" trading over the past 10 weeks.
However, Mulberry's chief executive, Bruno Guillon, who joined a year ago, defended the performance and said the latest warning would not affect his international expansion plans. He said: "We are still very confident with the strategy and will not be changing it. We need to focus on increasing our international presence, particularly with tactical advertising, so that tourists coming to London and Paris from China know about the brand."However, Mulberry's chief executive, Bruno Guillon, who joined a year ago, defended the performance and said the latest warning would not affect his international expansion plans. He said: "We are still very confident with the strategy and will not be changing it. We need to focus on increasing our international presence, particularly with tactical advertising, so that tourists coming to London and Paris from China know about the brand."
In October, bosses issued a "severe" profit warning after lower than expected international retail sales and a shortfall in wholesale revenue. Mulberry investors suffered losses of 22% in June when the company warned of a sales slowdown.In October, bosses issued a "severe" profit warning after lower than expected international retail sales and a shortfall in wholesale revenue. Mulberry investors suffered losses of 22% in June when the company warned of a sales slowdown.
Guillon said: "Sales in London have been particularly bad, with tourists not spending in our stores." However, according to the Office for National Statistics most recent data, tourist spending in the UK increased 11% in January to £1.24bn, although the number of foreign tourists fell 1%.Guillon said: "Sales in London have been particularly bad, with tourists not spending in our stores." However, according to the Office for National Statistics most recent data, tourist spending in the UK increased 11% in January to £1.24bn, although the number of foreign tourists fell 1%.
It is the latest in a series of disappointments for the brand, which has seen an incredible rise in recent years, with shares hitting £23.90 in April last year. They closed at £10.26 on Friday.It is the latest in a series of disappointments for the brand, which has seen an incredible rise in recent years, with shares hitting £23.90 in April last year. They closed at £10.26 on Friday.
Mulberry is now targeting pre-tax profits of £26m for the year to March, compared with expectations of £30.7m. Revenues are expected to come in at £165m, against analyst forecasts of £175m. Wholesale revenues for the year are expected to be down by about 15% on last year, as a result of slimming down its operations and lower than expected ordering during the season.Mulberry is now targeting pre-tax profits of £26m for the year to March, compared with expectations of £30.7m. Revenues are expected to come in at £165m, against analyst forecasts of £175m. Wholesale revenues for the year are expected to be down by about 15% on last year, as a result of slimming down its operations and lower than expected ordering during the season.
It was the wholesale business that caused the October profit warning, after the company focused on supplying department stores it felt were more in keeping with the brand's premium position.It was the wholesale business that caused the October profit warning, after the company focused on supplying department stores it felt were more in keeping with the brand's premium position.
Despite increasing focus on the international market, Guillon said the business would keep its UK identity and is opening a new factory in Bridgwater, Somerset, creating 300 jobs. However, the 20 stores opening this year will all be overseas.Despite increasing focus on the international market, Guillon said the business would keep its UK identity and is opening a new factory in Bridgwater, Somerset, creating 300 jobs. However, the 20 stores opening this year will all be overseas.
Mulberry expects retail like-for-like sales to grow by 6% this year. The company insisted the order book for autumn/winter 2013 was building "satisfactorily".Mulberry expects retail like-for-like sales to grow by 6% this year. The company insisted the order book for autumn/winter 2013 was building "satisfactorily".
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