Strong pound knocks Burberry and Mulberry shares
LUXURY goods retailers Burberry and Mulberry yesterday voiced concerns about a slowdown in the number of big spending international customers as they warned the outlook in some markets was getting tougher.
Shares in Burberry tumbled 54p to 1425p while Mulberry plunged 75p to 675p.
Mulberry chairman Godfrey Davis speculated that the strong pound could be putting off shoppers from Asia and other international markets Burberry meanwhile said it had seen "some softening" in the Chinese market, the most enthusiastic luxury shoppers in the world.
However Burberry reported a 7 per cent rise in revenues to £1.1billion in the six months to September 30, with core retail sales up 8 per cent to £748million.
Ponchos, leather bags, rainwear and men's tailoring, which plays to its British heritage, were strong performers, according to Burberry finance chief Carol Fairweather.
A year-on-year sales uplift of 5 per cent across menswear and womenswear helped offset a 4 per cent dip in childrenswear at the brand famed for its Cara Delevingne and Kate Moss-fronted ads. Burberry has proved a hit with Chinese shoppers in recent years but Fairweather admitted "we are seeing a little less of the Chinese in London."
It would be quite a difficult year because we needed to make some product changes
However, Burberry still managed a 10 per cent growth in sales in Asia Pacific and Americas. It said the impact of unfavourable exchange had recently reduced but cautioned that this benefit would be partly offset by a tough trading environment.
Meanwhile Mulberry warned its profits would be "significantly below" expectations. Mulberry is refocusing its business on more affordable brands, after its failed move to compete against higherend brands such as Prada.
Davis said: "It would be quite a difficult year because we needed to make some product changes."
However, he said new product launches such as the Cara Delevingne Collection of bags, priced from £800, were selling well.
A possible big seller in time for the important Christmas trading season, according to Davis, is the "mini Lily" bag at £300.
"Small bags appear to be popular," he said, adding: "Despite the current challenges, I remain confident that we will build on Mulberry's solid foundations and unique brand positioning in the luxury markets to restore growth in the medium term."
