Mulberry share price crashes after latest profit warning

on Oct 14, 2014
Updated: Oct 21, 2019
Listen, Tuesday, October 14: Shares in Mulberry Group Plc (LON:MUL) have tumbled more than twenty percent in London this morning after the luxury handbag maker forecast that its full-year pretax profit would be significantly below current expectations following a slump in first-half trading.

As of 08:08 BST, Mulberry’s share price had lost 23.38 percent to stand at 575.00p.
**Profit warning**
Mulberry said in a statement this morning that its revenues for the six months to September 30 had fallen 17 percent to £64.7 million as compared with the prior-year period, with retail sales down nine percent. UK full price sales were down 12 percent to £20.9 million partly on account of lower levels of tourist shoppers. International retail sales rose 20 percent to £7.5 million, while online sales inched one percent higher to £6.6 million, accounting for 10 percent of the company’s total sales.

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Mulberry’s wholesale sales fell more than expected, dropping 31 percent to £19.6 million, with the decline reflecting a combination of inventory reduction and conservative ordering by the group’s Asian and European franchise partners.
The company noted that its “profit before tax for the full year to March 2015 is expected to be significantly below current expectations”.

“Actual trading conditions have been more difficult than expected, in part due to the continuing headwinds affecting the luxury sector,” Mulberry pointed out in the statement.

Mulberry’s results come as FTSE 100 peer Burberry (LON:BRBY) today unveiled “more cautious demand” from its travel retail and European customers. ()

 **Analysts on Mulberry**
Reuters today reported that analysts at Barclays had slashed their full-year pretax profit forecast for Mulberry by 60 percent to £4 million, compared with £14 million a year earlier.
“Moving the brand to higher pricing points had clearly taken its toll on sales with the group responding by reverting back to its roots,” the analysts said in a note, adding that they expected new bag launches to help the company’s second-half trade.

As of October 10, the consensus forecast amongst five polled investment analysts covering Mulberry for the Financial Times suggests that investors should hold their position in the company. The four analysts offering 12-month price targets for the luxury goods group have a median target of 700.00p, with a high estimate of 796.00p and a low estimate of 600.00p.
**As of 08:30 BST, buy Mulberry shares at 599.00p.**
**As of 08:30 BST, sell Mulberry shares at 565.50p.**


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