Mulberry hit by slump in consumer spending

Luxury handbag maker Mulberry has warned that its full year profits will be hit by a slump in consumer spending,

The Somerset company has issued a trading statement for the last 12 months.

Against a backdrop of challenging macro-economic conditions and a decline in luxury consumer spending, especially in the last quarter, group revenue fell by four per cent.

The company said losses for the full year will be affected by the additional operational costs of new stores in Sweden and Australia and ongoing investments, including technology, supporting future growth of the group.

International sales were up by just over seven per cent and UK sales were down by 3.2 per cent.

Retail sales were in line with the prior year, driven by growth in Europe which included the first full period of ownership of our Swedish stores and the United States due to increased brand awareness.

This was offset by a decline in the UK and Asia Pacific, which continued to be challenging due to the macro-economic climate in China and reduced footfall across the region.

The decline in franchise and wholesale sales was broadly in line with the first half of the year, due to wholesale arrangements which converted to retail.

Chief executive Thierry Andretta said: “While we achieved positive revenue growth in the first half, Mulberry has not been immune to the broader downturn in luxury spending experienced in recent months, particularly in the UK and Asia. This decline was partially offset by positive trading in the US, where we have benefitted from increased brand awareness.”

“Looking ahead, the trading environment in the UK and China remains challenging and we do not expect this to change in the short term. We are therefore managing the business prudently, focusing on executing our strategy and vision to become a global sustainable luxury brand.”