Mulberry fights back with expansion strategy

After warning of lower profits the luxury brand aims to boost margins

The luxury handbag brand Mulberry has scrapped plans for new outlet shops to focus on opening full-price only stores as it moves even further upmarket.

The Somerset-based group will also develop its clothing line, worn by the Duchess of Cambridge this week, and produce new fashion products to expand its market reach.

The brand, which issued a profit warning in October – its second this year – that sent its shares tumbling by more than a fifth, will step up its global store expansion. It is eyeing up new stores in France and Germany and across the US, as well as new Asian stores.

Mulberry has already begun to reduce the number of retailers that it sells to on a wholesale basis. The reason behind the move to full-price stores is to control margins.

Margins will be a key focus for investors when the chief executive, Bruno Guillon, unveils half-year results to October this week. Mr Guillon, who has been at the brand famous for its Alexa and Del Rey handbags for eight months and was previously at LVMH and Hermès, will lay out his new strategy.

The profit warning led analysts to reduce their forecasts for the year to next March to £31m – below last year's £36m. But Mr Guillon is expected to explain the warning as a blip – a necessity to scale back the cheaper elements of the brand and refocus on the high end. Its handbags retail at upwards of £600.

With sales of £168m last year, the group also plans to focus on more UK-made products, which make up only a fifth of sales.

The group has hired Carl Barbato as its new head of the US, based in New York. The brand opened a new store in San Francisco this summer and is also looking for shops in Chicago, Los Angeles and Boston.

In the UK, it has doubled the size of its Edinburgh store, opposite Harvey Nichols, and is searching for another in London. Mulberry will also focus on opening stores in top international airports.

The group's shares started to recover last week, and fears of a wider slowdown of Chinese sales have largely been calmed by better recent figures.

Goldman Sachs expects China to continue to grow as a consumer of luxury goods. It predicts the luxury goods industry to grow 8.5 per cent a year to $1trn by 2025.

According to the trading house Banc De Binary, luxury retail shares have outperformed both mid-market and budget retail shares over the past 12 months. Luxury goods share prices have grown by an average of 16 per cent, compared to 11 per cent for mid-market retailer shares in the last year.

Start your day with The Independent, sign up for daily news emails
News
peopleIt seems you can't silence Katie Hopkins, even on Christmas Day...
Life and Style
fashion
Arts and Entertainment
tv
News
The Queen delivers her Christmas message
newsTwitter reacts to Her Majesty's Christmas Message
PROMOTED VIDEO
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Selby Jennings: Oil Operations

Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...

The Jenrick Group: Night Shift Operations Manager

£43500 per annum + pension + holidays: The Jenrick Group: Night Shift Operatio...

SThree: Trainee Recruitment Consultant - LONDON

£20000 - £25000 per annum + OTE £40,000 + Car + Pension: SThree: SThree are a ...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £35K: SThree: We consistently strive to be the...

Day In a Page

Isis in Iraq: Yazidi girls killing themselves to escape rape and imprisonment by militants

'Jilan killed herself in the bathroom. She cut her wrists and hanged herself'

Yazidi girls killing themselves to escape rape and imprisonment
Ed Balls interview: 'If I think about the deficit when I'm playing the piano, it all goes wrong'

Ed Balls interview

'If I think about the deficit when I'm playing the piano, it all goes wrong'
He's behind you, dude!

US stars in UK panto

From David Hasselhoff to Jerry Hall
Grace Dent's Christmas Quiz: What are you – a festive curmudgeon or top of the tree?

Grace Dent's Christmas Quiz

What are you – a festive curmudgeon or top of the tree?
Nasa planning to build cloud cities in airships above Venus

Nasa planning to build cloud cities in airships above Venus

Planet’s surface is inhospitable to humans but 30 miles above it is almost perfect
Surrounded by high-rise flats is a little house filled with Lebanon’s history - clocks, rifles, frogmen’s uniforms and colonial helmets

Clocks, rifles, swords, frogmen’s uniforms

Surrounded by high-rise flats is a little house filled with Lebanon’s history
Return to Gaza: Four months on, the wounds left by Israel's bombardment have not yet healed

Four months after the bombardment, Gaza’s wounds are yet to heal

Kim Sengupta is reunited with a man whose plight mirrors the suffering of the Palestinian people
Gastric surgery: Is it really the answer to the UK's obesity epidemic?

Is gastric surgery really the answer to the UK's obesity epidemic?

Critics argue that it’s crazy to operate on healthy people just to stop them eating
Homeless Veterans appeal: Christmas charity auction Part 2 - now LIVE

Homeless Veterans appeal: Christmas charity auction

Bid on original art, or trips of a lifetime to Africa or the 'Corrie' set, and help Homeless Veterans
Pantomime rings the changes to welcome autistic theatre-goers

Autism-friendly theatre

Pantomime leads the pack in quest to welcome all
The week Hollywood got scared and had to grow up a bit

The week Hollywood got scared and had to grow up a bit

Sony suffered a chorus of disapproval after it withdrew 'The Interview', but it's not too late for it to take a stand, says Joan Smith
From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?

Panto dames: before and after

From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?
Thirties murder mystery novel is surprise runaway Christmas hit

Thirties murder mystery novel is surprise runaway Christmas hit

Booksellers say readers are turning away from dark modern thrillers and back to the golden age of crime writing
Anne-Marie Huby: 'Charities deserve the best,' says founder of JustGiving

Anne-Marie Huby: 'Charities deserve the best'

Ten million of us have used the JustGiving website to donate to good causes. Its co-founder says that being dynamic is as important as being kind
The botanist who hunts for giant trees at Kew Gardens

The man who hunts giants

A Kew Gardens botanist has found 25 new large tree species - and he's sure there are more out there