Mulberry Group Plc, (MUL) a British luxury-handbag maker, fell the most in 14 years in London trading after the company said profit will unexpectedly fall because of declining shipments to wholesale customers.
The shares slid 24 percent to 1,006 pence, the steepest drop since March 3, 1998, cutting the company’s market value to 600 million pounds ($956 million).
The unscheduled announcement that profit is likely to drop compares with analyst estimates for pretax profit to rise to 41.8 million pounds in the fiscal year through March from 36 million pounds in the previous 12 months.
Wholesale shipments in the six months ended Sept. 30 fell 4 percent to 30 million pounds, as a result of which the maker of 1,100-pound metallic snake-print Del Ray handbags said it expects full-year revenue growth to miss estimates. Among the reasons for the decline were a strategic decision to trim international wholesale accounts and a tougher climate in Asia that led to “cautious ordering,” Mulberry said.
The drop in wholesale shipments “is where the problems lie,” Philip Dorgan, an analyst at Panmure Gordon in London, said in a note. “Mulberry has decided to cut accounts deemed to be inappropriate and this has coincided with a slowdown in international markets,” said the analyst who kept his buy recommendation on the stock.
Luxury-goods makers have reported divergent sales patterns since the end of August as an imminent government-leadership change in China and Europe’s sovereign-debt crisis take their toll on demand. Burberry Group Plc (BRBY) said last month that pretax profit for the year ending March would be at the lower end of a range of estimates, citing slowing same-store sales.
Worldwide luxury sales will grow 5 percent in 2012, less than half last year’s pace, led by a slowdown in Europe, and expand at a similar speed through 2015, according to Bain & Co.
Mulberry said revenue rose 6 percent to 76.5 million pounds in the six months through September, slowing from a gain of 25 percent in the second half of the previous financial year. Retail revenue of 46.5 million pounds rose 13 percent in total and 7 percent on a like-for-like basis, the company said.
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