Good times roll on for Mulberry and its £3,000 handbags

By This Is Money
Updated: 09:38 EDT, 11 March 2011

Demand for luxury handbags appears undiminished after Mulberry today revealed faster-than-expected growth so far this year.

Despite slow recovery from the recent recession and austerity measures beginning to kick in 2011, the handbag maker continues to thrive.

It also one the stock market's star performers.

It is the second time in 2011 that the Bath-based firm has upgraded sales and profits guidance as it benefits from strong demand in the UK and overseas.

Buoyed by a successful show at last month's London Fashion Week, the company added that order levels for its autumn collection were encouraging.

Mulberry handbags can sell for as much as £3,000 and include its Alexa handbag - named after television presenter Alexa Chung (pictured below). Other brands include Bayswater, Daria and Mitzy.

Booming demand for its products has made it one of the fastest growing stocks. Its shares, which peaked at around 1400p last month compared with 200p a year ago, were 13% higher at 1374.5p by lunchtime today.

Philip Dorgan, a retail analyst at Altium Securities, said: 'Mulberry's brand has become both relevant and desirable to the global consumer. But it barely has a toe in some of the world's largest luxury goods markets.'

He has increased his forecast for pre-tax profits in the year to March 31 by 16% to £18.5m and said revenues should reach £120m.

Mulberry is expanding its factory by nearly a third to help it meet demand, particularly from international consumers. It has 82 stores and concessions, of which 35 are overseas partner stores. In the UK, it has 21 own-stores and 26 concessions.

Mulberry shares were tipped by our Midas column last June at 202p. Investors were then recommended to bag some profits at 899p. [Find out about Midas Extra share tips]