LONDON (ShareCast) - - Full-year profit will be below expectations
- Fourth downgrade in last two years
- To offer more affordable prices amid intense competition

Luxury handbag and fashion group Mulberry issued a new profit warning on Thursday, its fourth in two years, as it battles against dwindling sales and increased competition.

"The primary objective is to reinvigorate sales by the introduction of more affordable new product," said the maker of Bayswater and Alexa handbags.

While this is expected to have short-term financial consequences, the group conceded it is necessary to "ensure the future strength of the Mulberry brand".

The Somerset-based firm, who is still looking for a replacement Chief Executive Officer after Bruno Guillon stepped down in March, said turnover for the year ended March 31st 2014 will be broadly in line with expectations whilst on an underlying basis, profit before tax is expected to be marginally below current expectations.

Following a review, the high-end luxury firm said it has decided to impair the net carrying value of fixed assets of two US stores, creating a non-cash charge for the year of £2.7m. This, combined with the costs of the recent management change, mean that the pre-tax profit for the year is expected to be approximately £14m.

Mulberry said it still plans to expand internationally, however the rate of new openings has been slowed by nearly 40% to control costs while allowing existing stores to "achieve greater traction".

The group confirmed that its new factory in Somerset, which opened last June, is now fully operational with over 300 employees.

Mulberry's share value has slumped since the start of the year after it reported weak Christmas sales.



CJ

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