Warnings send shockwaves through luxury goods sector
editor:
0131-620 8462 Two of Europe’s most revered luxury brands issued warnings yesterday sparking fears that the consumer slowdown may be spreading to the top end of the market.
Luxury goods makers have proven surprisingly resilient in the face of the economic slowdown, though many British and European firms have focused on ramping up their presence in booming emerging markets such as China and India to counter the slack closer to home.
Confidence was hit as British handbag maker Mulberry issued a profit alert, partly blaming a drop in spending by tourists who have been crucial to the health of the sector.
The firm, whose explosive growth of recent years has made it one of the nation’s biggest export success stories, described sales over the last ten weeks as “disappointing”. It warned investors that profits will miss expectations following the post-Christmas slowdown.
Shares in the group slid 17 per cent to 1,024p, while fashion peer Burberry dropped 4 per cent to close at 1,330p.
Meanwhile, Danish manufacturer Bang & olufsen – whose four and fivefigure designer televisions and audio systems sit at the very top end of the market – cut its sales outlook, adding to jitters in the sector.
B&o’s chief executive Tue Mantoni said the market in crisis-hit Europe had been worse than expected in the past six months.
Mulberry, which sells Bayswater handbags for around £1,400 and mint green cotton tweed coats for £1,750, had issued a profit warning in octo- ber, blaming a slowdown in Asian demand. The latest alert is a further blow for chief executive Bruno Guillon, who joined the company from luxury brand Hermes last March.
He said efforts to refine Mulberry’s distribution network were in the long- cent jump in pre-tax profits to £36 million after a series of upgrades on the back of strong demand for its Alexa bag and the Del Rey bag inspired by American singer Lana Del Rey. It expects profits for the current year to the end of March to drop 28 per cent. The group
“After three years of rapid growth, Mulberry has experienced a year of consolidation”
Bruno Guillon