Mulberry profit falls after CEO, creative head leave

Mulberry, the UK luxury bag maker that lacks a chief executive officer and creative director, reported a second straight decline in annual earnings amid weaker third-party sales at home and in Asia.

Pre-tax profit for the 12 months through March fell to £14 million from £26 million a year earlier, Mulberry said today in a statement.

The company said in April that profit would be about that amount, lowering its estimate for the second time in less than three months. Wholesale revenue slid 6 per cent.

Mulberry parted company with chief executive Bruno Guillon in March after his plan to raise prices while expanding globally failed to resonate with consumers and led creative director Emma Hill to quit last year.

The handbag maker, which lost two-thirds of its value during Mr Guillon’s two-year tenure, plans to revive sales by introducing more affordable products, though the strategy will weigh on earnings, the company has said.

“The outlook for the current financial year remains challenging,” Mulberry said. The product collection for spring/summer 2015 has been “well received” by wholesale customers, though the company still forecasts a “double-digit decline” in revenue from that channel for the year as a whole.

The shares fell as much as 4.5 per cent and were down 0.3 per cent at 706 pence as of 8:32 am in London, extending their decline this year to 26 per cent.

"Mulberry enters the new year in a state of transition," Helen Norris, an analyst at Barclays, said in a note to clients.

She lowered her estimate for 2015 pretax profit to £10 million from £11 million, saying that the first half “looks especially tough.” Total sales fell 1 percent to 163.5 million pounds, Mulberry said. In the 10 weeks ended June 7, retail sales slid 9 per cent compared with the same period a year ago, while on a like-for-like basis, the decline was 15 per cent.

Bloomberg