Mulberry’s handbagging

Despite fashion’s love affair with Alexa and Del Rey celebrity-inspired handbags, Mulberry lost some important investor fans today. Its shares plummeted 22% after its present trading disappointed the City.

It revealed a strong, full-year profit up 54% to £36 million and sales up 38% to £168.5 million for the year. But poor April sales and a massive, 24% fall in outlet sales led the market to sell out, with shares down to 1557p from 2013p.

Matthew McEachran, retail analyst at Singer Capital Markets, said: “They are a good set of results but current trading has been disappointing and there is low transparency on gross margins. When stock is on a high rating there is no room for error. But the business has super, long-term prospects.”

Philip Dorgan, an analyst at Panmure Gordon, said the fact that few shares are traded, the high valuation, the sales slowdown having not been well presented to analysts prior to the results today and the “slight miss to earnings”, caused the share sell off.

Godfrey Davis, who stood down as chief executive in March to be replaced by Bruno Guillon, said at his first full-year results since becoming non-executive chairman: “Our results are in line with expectations, and don’t forget the forecasts were ramped up at the half year so we have done well to meet such racy expectations.”

Guillon, who joined from Hermes, is tasked with further overseas expansion. New stores in Europe, the US and Asia with 14-20 stores a year planned.

Davis said: “Bruno’s challenge is overseas. The UK market, although still growing, is mature for us and the key message is global expansion.”

Despite the turmoil in Europe Davis said Europe was still a place for new stores. He added: “Expansion in the US and Europe is key as Asia looks to the west to see what is good. We must be in all these markets.”

Mulberry also revealed plans to open more UK factories. It plans to cut, stitch and sew up to 40% of its leather bags in England.

It has extended its existing factory in Somerset, plans a new Somerset factory in Bridgwater to open by the end of next year and has a third in the pipeline.