Mulberry reveals rise in profits

 

British success story Mulberry rolled out more bumper profits today as it highlighted the demand that has prompted it to open a second UK factory.

Lifted by strong trading in Asian markets and a 30% rise in sales from 45 stores and department store concessions in the UK, Mulberry reported a 54% jump in profits to £36 million for the year to March 31.

While sales growth has slowed in the weeks since then, Mulberry will press ahead with recently announced plans to open a second factory in Somerset in a move creating 300 jobs and doubling its UK capacity.

The £7.5 million project in Bridgwater, which is being supported by the Regional Growth Fund, comes less than a year after it completed the extension of its existing factory at Chilcompton, Somerset, creating 60 new jobs.

Revenues rose 38% to £168.5 million over the last financial year, helped by new stores in New York and at Westfield Stratford near the Olympic site.

The company's best known product of recent times has been the Alexa bag - inspired by style icon Alexa Chung - while in recent weeks it has launched the Del Rey bag, which is inspired by American artist Lana Del Rey.

Mulberry said store sales were up 12% for the 10 weeks to last Saturday as it comes up against tougher comparatives with a year earlier and as trading conditions become more difficult.

Chairman Godfrey Davis said: "While the current economic conditions make the short term trading outlook more challenging in some markets, we remain confident about Mulberry's long-term future."

Shares fell 20% today, undoing some of their 50% hike in the past year, as profits were £2 million less than the City forecast.

Matthew McEachran, an analyst at Singer Capital Markets, said the 25% increase in the dividend was also below expectations but he believes growth prospects remain "exciting".

The group plans to open between 15 and 20 international stores this year, including in South Korea, San Francisco, Singapore, Japan and Shanghai.

Jaana Jatyri, chief executive of fashion forecaster Trendstop.com, said: "More than even Burberry, perhaps, Mulberry is a brand that has benefited from the growing demand in Asia.

"Some are even buying Mulberry hand-crafted handbags as an investment, seeing them as a safe haven similar to gold."

The group, which was founded in 1971 by Roger Saul and his mother Joan, recently appointed Frenchman Bruno Guillon, former managing director of luxury brand Hermes, as chief executive.

PA

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