Reuters: Global Markets: Mulberry shares slump on slow start to year

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Mulberry shares slump on slow start to year Jun 14th 2012, 10:16 By Karen Rebelo Thu Jun 14, 2012 6:16am EDT (Reuters) - British luxury fashion house Mulberry Group Plc (MUL.L) reported a weaker-than-expected 3 percent rise in comparable retail sales for the 10 weeks to June 9 and expressed caution about near-term trading conditions, sparking a sell-off that wiped out a quarter of its market value. "...Like-for-like sales didn't grow as much as what the market was expecting," Merchant Securities analyst Amisha Chohan said. Mulberry, which designs, makes and sells leather goods and accessories, said its full-year pre-tax profit rose 54 percent in the year to March, about in line with what the market was expecting. Revenue, however, fell short. The company's shares, which had risen 34 percent since the start of the year, fell as much as 25 percent to 1,505 pence on the London Stock Exchange on Thursday. "There has been an over-reaction to the share price," said Chohan. "I mean it's sitting at a premium to the luxury sector and obviously one was expecting it to outperform or at least demonstrate their ability to meet consensus." The maker of luxury handbag brands such as Bayswater, Del Rey and Alexa said comparable sales from its UK stores had recovered over the past six weeks, rising 21 percent. However, Chairman Godfrey Davis expressed doubts about whether the London Olympics starting next month would have much of a positive impact on sales. "The Olympics I'm personally slightly cautious about because I think the city will be full of sports fans and not, particularly in our case, luxury shoppers," he said. Mulberry, whose overseas business accounts for 39 percent of its total revenue, said it was looking at opening 15 to 20 international stores in the current year. "If you look at the luxury business, in certain centers like London, Paris, Milan, actually the local retail business is only part of the story. The international tourist shopping in these world cities is enormous," Davis said. Full-year pretax profit rose to 36 million pounds ($56.1 million) from 23.3 million a year earlier. Revenue grew 38 percent to 168.5 million pounds, with international sales increasing 61 percent. Analysts on average were expecting revenue of 172 million pounds. Mulberry shares were down 22.7 percent at 1556 pence at 0610 EDT. (Reporting by Karen Rebelo in Bangalore; Editing by Maju Samuel and Ted Kerr) Link this Share this Digg this Email Reprints

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