Mulberry, the luxury handbag maker, has informed investors that full year profits will be much lower than expected after lackluster revenue results.
First half revenue in 2014 dropped by 17%, down to £64.7 million (compared to £78.1 million in 2013).
The company said that it had anticipated a “challenging year”, however, trading conditions have actually been much harder than forecast.
Mulberry underwent radical restructuring earlier this year.
Earlier this year Mulberry announced radical restructuring. Under its previous chief executive the company tried to compete with higher end luxury brands, which was a “misguided” move, according to analysts.
Godfrey Davis, the new chief executive of the company, has made its products more affordable, with its range of “Tessie” bags – that start at £500. According to the company’s Trading Update, this line of bags have contributed to improving sales trends and the company is confident that it is taking the right steps to restore the business to growth.
The Tessie line represents the future of the company
Mr Davis said:
“As I explained in June, my first actions on returning as acting chief executive focused upon reinforcing our product ranges. I explained that the impact would be progressive and should produce benefits over the medium term. The new products are beginning to reach our shops with the launch of the Cara Delevingne bags at the beginning of September and with further new product being offered in our shops during November.”
He added:
“As expected, the first half has been difficult, but the Group remains profitable and cash generative, giving us the resources to invest for the future. Despite the current challenges, I remain confident that we will build on Mulberry’s solid foundations and unique brand positioning in the luxury market to restore growth in the medium term.”