Shares in West-based international luxury goods group Mulberry lost more than a quarter of their value today as it warned that lower UK sales at Christmas will mean its annual profits will be “substantially” less than expected.
It also said “significant” cancellations in the wholesale market in Korea would take their toll on sales. 
The Chilcompton, Somerset-based group, best known for its upmarket bags, said while retail growth in international markets had continued during December and January, the trading environment in the UK had deteriorated over the period and in the wholesale channel the Korean market has been significantly more challenging than anticipated.
Total retail sales were 3% below last year for the 17 weeks to January 25, Mulberry said in a trading update to the London Stock Exchange.
This reflected the competitive environment in the UK, with substantial discounting in the sector over the Christmas trading period, it said.
Mulberry’s iconic bags are often seen on the arms of A-list celebrities such as Kate Moss. But some industry watchers have said that recent price rises have put them beyond the reach of many British buyers. The group’s Alexa bag, named after model Alexa Chung, sells for up to £4,500. It is Mulberry’s third profits warning in 18 months,
Mulberry’s shares began tumbling as soon as the latest profits warning was posted this morning. When the market closed the shares were down 245.5p, or 27.3%, at 654p on the day.
Chief executive Bruno Guillon, who joined from Hermes in 2012, said in the statement: “Due to tough trading conditions over the Christmas period which saw significant discounting across the market, Mulberry has experienced lower than expected UK retail sales which, together with wholesale order cancellations from Korea, will adversely impact our profit this year.
“Despite this, the company continues to be cash generative and to invest in the ongoing process of transforming Mulberry from a domestic to a global luxury brand, the progress of which is demonstrated by the continued growth in international retail sales.”
Mr Guillon is leading efforts to make Mulberry more of an international brand rather than a quintessentially British one.
He told Vogue’s British website this morning: “We must talk about the brand more. The spirit of Mulberry and its heritage are so appealing but we don’t communicate that message enough. We’ve opened another workshop in the UK and 50% of our bags are now made here; that sort of information is important to our customer, here and elsewhere.
“We have a very important store opening in Paris this year, we’re increasing presence in America, and we are close to securing a Shanghai flagship. We have a historic UK customer base – which we love – but we must depend less on the British market.”
