Cost of leather dints Mulberry’s profits
07/12/2012
The British company reported a 36% decline in pre-tax profits to £10m, which it said was “largely due to the cost of quality improvements in raw materials and manufacturing techniques”.
However, sales were up 6% and the company stated it would increase its product offering in women's shoes and small leathergoods, and “will continue to make product quality enhancements, including in our leather and components sourcing”.
Bruno Guillon, Mulberry’s chief executive, added: “British leather craftsmanship is central to our brand and we have now commenced construction of our second UK factory which will create 300 new jobs and open during the summer of 2013."
The brand has sought to reposition itself as high-end brand, rather than at the mid range, by limiting stock in certain department stores, and Mr Guillon defended the company’s strategy of pushing into international markets. It aims to open 15 to 20 stores per year, but did not give the time frame.
Mr Guillon said: “We have rationalised certain wholesale accounts and refocused the outlet business which has impacted financial performance in the short term. However, we firmly believe that this is in the long term interests of transforming Mulberry into a global luxury brand.”
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