Mulberry Group Plc (MUL), the U.K. luxury bag maker that recently parted company with its chief executive officer, reined back profit estimates for the second time in less than three months and said a plan to boost sales with more affordable new products will weigh on earnings.
Underlying pretax profit for the year ended March 31 will be “marginally below” analysts’ estimates because of costs linked to last month’s departure of CEO Bruno Guillon and to write down the value of two U.S. stores, the Somerset, England-based company said today in a statement. Mulberry is due to report results for the year on June 12.
Mulberry shares fell as much as 7.5 percent in London trading. Guillon left after two years during which the handbag maker lost two-thirds of its market value. Interim Executive Chairman Godfrey Davis plans to reinvigorate sales by introducing more affordable new product, Mulberry said today.
“As a consequence of these factors, in particular the pricing strategy, there will be a material adverse impact on profit whilst brand momentum rebuilds,” Mulberry said. The company also plans to slow store openings, adding five this year, compared with eight in the previous 12 months.
The shares were down 3.5 percent at 684.5 pence at 8:39 a.m., extending their drop this year to 28 percent.
Pretax profit for the year just ended was about 14 million pounds, Mulberry said, down from 26 million pounds a year earlier. Before today, analysts had predicted earnings of 19 million pounds on average, according to the company.
Revenue for the year was “broadly” in line with expectations, Mulberry said.
“The group remains profitable and cash generative, giving us the resources to invest for the future,” Davis said.