A profit warning from Mulberry wiped £187m off the designer’s market value yesterday and sparked a sell-off across the luxury sector as it became the latest brand to highlight weak growth in China. Its sought-after “It bags”, such as the £795 Alexa bag or its classic £695 Bayswater, have failed to lure enough overseas shoppers, while its wholesale shipments slumped 4 per cent, sending the company’s shares down by 24 per cent.
Mulberry’s UK retail sales grew by 10 per cent during the half year to October, with sales up 6 per cent to £76.5m. But the company’s difficulties lie in its overseas business. Its finance director Roger Mather said: “We’re not falling over a cliff, it’s just everyone’s got used to enjoying compound annual growth of 25 or 30 per cent, and this year is a pause for breath. The share price will be what it will be. We’ve got to grow this brand.”
Mulberry’s woes were not echoed across the pond by the US handbag brand Coach. In its first-quarter update the brand reported a 10.6 per cent rise in sales to $1.16bn (£728m), driven by both overseas and US sales. Coach, which uses actress Gwyneth Paltrow as its “face”, met analysts’ expectations for the three-month period to October with net profit of $221m, up from $215m in the previous quarter.
adapted from The Independent
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