Mulberry bullish despite changes hitting profits

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Handbag maker Mulberry gave an upbeat outlook yesterday with retail sales on the rise after its half-year profits were hit by changes to its wholesale business.

The luxury goods group, which in October warned on profit due to slowing demand in Asia and a decision to slash its wholesale network, reported a pre-tax profit of £10 million for the six months to the end of September, down 36 per cent on a year earlier.

But the firm, whose leather handbags can sell for more than £1,000, said like-for-like retail sales were up 11 per cent in the nine weeks to 1 December. It told investors that it expected to meet full-year City forecasts. Chief executive Bruno Guillon said: “We continue to focus on creativity, craftsmanship and quality and will place great emphasis on reinforcing Mulberry’s luxury positioning through the quality of our products, retail experience, marketing communications and choice of distribution channels.”

The group confirmed that it had begun construction of its second UK factory, due to open next summer creating some 300 jobs. Mulberry, which expects the changes to its wholesale operations to result in a 10 per cent decline in full-year revenue for the unit, said it was committed to overseas expansion, targeting 15 to 20 operated and partnered store openings per year.