Mulberry bags a result with profits forecast to triple

MULBERRY'S popularity with the fashion pack is showing no signs of abating as the luxury designer prepares to report that annual profits more than tripled in the past year.

The firm, which is best known for its handbags but whose womenswear collections have also proved a hit with celebrities such as Cat Deeley, is expected to unveil bumper pre-tax profits of 21.5 million for the year to end of March, up from 6.1m previously.

Like many other fashion houses, Mulberry has continued to enjoy strong demand for its luxury handbags both in the UK and abroad despite the squeeze on household spending. Analysts said the company also received a boost from London Fashion Week in February when its latest collection was met with rave reviews from fashion critics.

Mulberry's shares have been among the London Stock Exchange's strongest performers in the last 12 months, rising by a staggering 533 per cent. They closed on Friday at 1,299p.

Investors have been piling into luxury goods firms such as Mulberry and fellow UK label Burberry as they believe an appetite for designer goods in emerging economies such as China offers plenty of opportunity for growth.

Burberry stock has risen 65 per cent over the last 52 weeks and the 155-year-old British label last month also reported stellar annual results. It saw a 39 per cent increase in underlying pre-tax profits to 298m, after a 27 per cent increase in revenues to 1.5 billion. Retail analysts say they will be pressing Mulberry this week on where it plans to invest cash generated from its strong performance.

The group has already unveiled plans to develop a retail business focused on Germany and Austria.

It has also expanded its factory by a third to meet rising global demand.

David Stoddart, analyst at broker finnCap, said of Mulberry: "The global potential for what remains a relatively small business offers the scope for strong profits growth for many years."

TV presenter Alexa Chung has become a poster girl for the company after it dedicated its "Alexa" satchel to her.

The success of luxury retailers this year has come against the backdrop of a very different story on the high street, which is struggling against the tide of poor consumer confidence.

On Friday, 1,000 jobs were put at risk when a chain created after last year's collapse of Ethel Austin went into administration.

Life & Style Retail, which runs 91 stores across the UK, became the latest victim of the high street squeeze.

Howard Archer, chief UK and European economist at IHS Global Insight, expects the latest retail figures to be released on Thursday to show that sales volumes fell back by 0.6 per cent month-on-month in May. This would see year-on-year growth in retail sales volumes retreat appreciably to 1.5 per cent in May from 2.8 per cent in April, he said.