Mulberry, the luxury goods group which is struggling to return to profitability, yesterday produced evidence that it was successfully revamping its business, saying losses had narrowed in the six months to 30 September.
Disposing of loss-making stores in Japan and Europe and selling less stock at knock-down prices helped reduce losses to £600,000 from £1.1m in the same period last year.
Godfrey Davis, who became joint chairman and chief executive of Mulberry after Roger Saul was ousted at the end of last year, said: "After two difficult years we have made progress in returning the group to profit. Operating losses for the period have been halved and stock levels reduced."
Teather & Greenwood, Mulberry's house broker, expects the company to return to the black next year, as demand returns for expensive accessories and clothes, helped by measures Mr Davis and his new management team have taken.
The company, which is listed on the junior Aim market, has been hurt along with the rest of its sector by a drop in the number of tourists to London. It has also been forced to slash prices to reduce surplus inventory.
Mulberry said it had not had to sell as much stock at reduced prices in the six months to the end of September. While sales were down 9 per cent because of the disposals of under-performing stores, profit margins increased 2 per cent to 46 per cent.
Mulberry is the latest British company to try to cash in on consumers' desire for luxury goods made in Britain, and is trying to emulate the success enjoyed by groups such as Burberry. Aquascutum is another company trying to revitalise its brand.
Mulberry said its leather handbags and other non-clothes items had sold particularly well. Accessories accounted for 70 per cent of sales.
The company, which got into trouble in 2000 when it attempted to break into the US market, said international expansion plans were back on the drawing board.
Mulberry is particularly keen to target the United states again, believing that its brand is popular with the country's shoppers.
The Singaporean billionaire Christina Ong, whose family now owns 52 per cent of Mulberry, has made it clear she backs the new plan formulated by Mr Davis, including investing for a second time in overseas expansion.