Mulberry today announced that profits rose 54% to £36m for the year ending 31 March 2012. An encouraging result, but unfortunately revenue proved a spanner in the works: it was not quite what the firm’s investors were hoping for. Turnover was up 38% from £121.6m in 2011 to £168.5m in 2012 but the combination of higher expectations and a bit of recent management reshuffling in the firm was obviously enough for shareholders to get panicky.
Shares in the company fell 25% in morning trading today as a result, with investors evidently irked that the year had not been as fruitful as they had imagined. There’s no doubt that the company’s finances are healthy though, not to mention that the company recently hired Bruno Guillon who brings experience from top-end luxury firms Hermes and LVMH to succeed Godfrey Davis as CEO. The latter will move to non-executive chairman at the end of June.
Management changes are always a nerve-wracking time for investors but Davis will be staying on as non-executive chairman. So Mulberry will benefit from the new experience being brought in house by Guillon while keeping the wise old guard close. The best of both worlds, then. Alongside this management reworking though, are plans to open around 20 overseas stores in the next 12 months. The race for dominance in the overseas luxury brand market is increasingly aggressive, with players such as Burberry now enjoying serious traction in the Chinese and Indian markets.
As a smaller player though, Mulberry has some way to go before it can get into the major league. And perhaps the investors know it…