Global Biz

Mulberry eyes US, China as business booms

(Agencies)
Updated: 2011-06-16 19:17

LONDON - British luxury fashion brand Mulberry said it expects overseas sales to overtake those in its home market in two years, as it beat forecasts with a more than fourfold increase in profit.

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Shares in the firm, best known for its leather handbags priced around 500-900 pounds ($809-$1,455), rose more than 6 percent on Thursday after the company outlined its potential for expansion, particularly in China and the United States.

"Probably in the year after next the sales to the rest of the world will exceed the UK and that trend will continue," Chairman and Chief Executive Godfrey Davis said.

"We have two shops in New York so there's quite a lot of the United States to go at, we've got one shop in Beijing so there's quite a lot of China to go at," he said.

Mulberry, which designs, manufactures and sells leather goods and accessories, trades from 44 owned stores and department store concessions in the UK and 42 owned or franchised stores overseas.

Davis expects at least 12 overseas openings in the 2011-12 year, with new stores in the US, South Korea, China, Germany, Switzerland and Austria.

"We believe that this could be just the beginning of the Mulberry story given the limited footprint held in many of the largest luxury goods markets outside the UK," said John Cummins, analyst at house broker Altium Securities, who raised his earnings forecasts by 12.8 percent and 12.1 percent for the 2011-12 and 2012-13 years respectively.

Shares in Mulberry, which have risen nearly sixfold over the last year, were up 6.4 percent at 1,420 pence at 0959 GMT, valuing the business at about 868 million pounds.

The firm has a greater market capitalisation than the combined total of struggling British high street retailers Dixons , HMV and Game .

The global luxury goods market has continued last year's strong recovery, defying fears it might be hit by austerity measures in Europe and steps to cool fast-growing emerging market economies. Last month Burberry posted a 39 percent rise in profit.  

Mulberry made a pretax profit of 23.3 million pounds in the year to March 31, ahead of analysts' average forecast of 21.5 million pounds, according to Thomson Reuters I/B/E/S data, and 5.1 million pounds made in 2009-10.

2010-11 revenue jumped 69 percent to 121.6 million pounds, with international sales up 145 percent to 40.5 million pounds.

Both retail and wholesale sales were up 38 percent in the 10 weeks to June 4.

Mulberry, which ended the year with cash of 21.4 million pounds, is paying a dividend of 4 pence, up 82 percent.

($1=.6118 Pound)