Mulberry aims for Asia as profit slumps

LONDON, England - British luxury fashion group Mulberry pinned its hopes on affluent customers in Asia and the United States on Thursday to help turn the group around after it posted an expected 28 percent slump in annual profit.

The firm, known for its Bayswater and Alexa handbags, has issued two profit warnings since October, due to lower tourist spending in Europe and a shift towards a more expensive, upmarket position from its traditional affordable luxury.

It reported pretax profit for the year to March 31 of 26 million pounds (26.17 million pounds), down from 36 million pounds a year ago. Revenue fell 2 percent to 165 million pounds, also hurt by a reduction of wholesale accounts and weak Asian demand.

The group said it expected trading conditions in Britain and Europe to remain tough this year, highlighting the importance of its plans to expand in Asia and the United States.

"The Asian customer is important globally as tourism continues to be a critical component of luxury sales," said Chief Executive Bruno Guillon, who has hiked prices by 12 percent and closed small European wholesale accounts since joining in March last year.

"Greater visibility in Asia will allow us to benefit from tourist traffic in Europe and the U.S. at the same time as growing our business locally."

The group makes over 80 percent of its sales in Britain and Europe where depressed consumer spending, combined with weaker demand from Chinese tourists, has contributed to a slowdown in the luxury goods market - conditions echoed in trading updates from larger rivals such as Hermès and PPR.

Mulberry, which is targeting 15 to 20 new stores in its new financial year, said retail revenue for the 10 weeks to June 8 was up 9 percent, with like-for-like sales up 6 percent.

In another setback for the firm Mulberry's Creative Director Emma Hill, acclaimed for boosting the group's global reputation in her six year stint, announced earlier this week that she would leave the company at her request on a yet to be given date.

Shares in the company closed at 948.5 pence on Wednesday, down 55 percent on a year ago, valuing it at around 560 million pounds. They were down 0.7 percent in early trading on Thursday.