Today's Falling Knife: Mulberry Crashes 16%

LONDON -- Mulberry (LSE: MUL  ) this morning announced that revenue and pre-tax profit for the year ending March 31 are expected to be below previous market expectations, sending the shares crashing 16% as of 9 a.m. EDT.

Despite seeing retail sales over Christmas in line with expections, the English luxury goods retailer blamed the shortfall on weaker-than-anticipated trading conditions after the festive period -- including reduced tourist spending in London stores -- and lower-than-expected in-season ordering.

This means that wholesale sales for the year are now expected to be down approximately 15% compared with the year ending March 31, 2012, while revenue and pre-tax profit are expected to come in around 165 million pounds and 26 million pounds, respectively. However, management said the order book for autumn/winter 2013 was building "satisfactorily."

Chief executive officer Bruno Guillon commented:

After three years of rapid growth, Mulberry has experienced a year of consolidation while we build the foundations for future growth. We are focused upon optimising the distribution network and adapting our tactical marketing strategy to drive international brand awareness. We continue to reinforce Mulberry's luxury positioning through an enhanced focus on creativity, craftsmanship and quality.

Mulberry had previously seen success off the back of the rise of the emerging middle class in China, with luxury goods competitor Burberry also performing well. With the shares currently standing at 1,035 pence, some contrarian investors may view today's price crash as a buying opportunity. Indeed, the shares have increased more than 17-fold in the last five years since 2009's low of 60 pence!

If you're looking for companies that have strong potential to soar in price, then we've pinpointed our favorite growth share from the FTSE 100. Our analysts have produced a free report in which they evaluate its finances, risks and growth prospects going forward. Simply click here to get your copy delivered to your inbox immediately -- it's completely free.


Read/Post Comments (0) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2327094, ~/Articles/ArticleHandler.aspx, 9/2/2014 12:48:59 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement