The British luxury brand said its plans to move even further upmarket were crucial to growth in Asia, where local shoppers and outbound tourists are still splashing out on high-end goods.
Mulberry, known for its Bayswater and Alexa handbags, generates more than four-fifths of its sales in Britain and continental Europe. It has been hit hard by the economic turmoil in the eurozone and consumer belt-tightening elsewhere.
Results released yesterday show that full-year profits tumbled by more than a quarter to £26 million – widely anticipated amid investment in international markets.
Total revenues were down 2 per cent. Sales in the group’s own stores were up by 6 per cent on a like-for-like basis but dragged down by a 16 per cent slide in wholesale. The figures came just days after the firm announced that creative director Emma Hill was leaving.
Chief executive Bruno Guillon has responded to the tough trading backdrop in part by taking the group a little more upmarket from its traditional position of “affordable luxury”.
It has hiked prices on products and launched more handbags priced over £1,000, which it says have gone down well in Asia and the United States. The company is also using higher quality materials.
Guillon played down the shift upmarket, saying 60 per cent of products were still on sale for less than £1,000.
The group was having a challenging time because it did not have a high enough profile in Asia, and was addressing that by opening more stores in the region, he said.
“Greater visibility in Asia will allow us to benefit from tourist traffic in Europe and the US at the same time as growing our business locally,” he added.
Mulberry revealed that in the year to the end of March it had opened 17 additional international stores and recently completed the construction of a second Somerset factory, doubling UK production capacity.
Five partner stores were opened in Korea with others in Bahrain, Beijing, Nagoya, Shanghai and Singapore.
Figures for the ten weeks to 8 June showed like-for-like retail revenues continuing their upward trend, climbing 6 per cent.
Three stores have been opened since the end of March with a total of 15 to 20 expected during the financial year.
Helal Miah, investment research analyst at the Share Centre, said the group’s long-term prospects looked attractive. The stockbroker has added Mulberry to its “buy” list. Miah noted: “In a weak global environment, the business is still profitable and has no debts on its books.”
Panmure analyst Philip Dorgan said: “We don’t think that the long-term goal of becoming a global brand is beyond Mulberry.”