Mulberry and Lululemon change plans after lower profits

Friday, 18 April 2014

Thursday saw a good deal of movement within the apparel sector, with Mulberry and Lululemon Athletica making it to the news, both on their respective strategy's twists after worst-than-expected results.

British luxury fashion retailer Mulberry has issued a profit warning Thursday morning, the fourth in the last two years. In the second profit alert since Christmas, Mulberry has advanced that profits for the year to 31 March would be lower than the 19 million pounds expected by the market, in the region of 14 million. Godfrey Davis, who became interim executive chairman of Mulberry following Bruno Guillon's departure in March, said: "Following the recent change in management, we are focusing on achieving sales growth through the reinforcement of our product offering at more affordable prices to meet the expectations of our loyal customers.”

"This will have a short term consequence but is necessary to ensure the future strength of the Mulberry brand," added Davis. In this vein, the company has reassured market and investors alike, saying it remained committed to its international expansion but would slow the rate of store openings to five in 2014-15 from original plans for eight.

Elsewhere, Laurent Potdevin, chief executive at Lululemon Athletica unveiled Lululemon's global prospects, saying he wants to dominate the international market. "Given the vastness of the (global) market, there are many cities in which the question is not, Will we have a store?, but When will we have a store?" Potdevin said. "The global size of our playground is massive."

He added that the company would not have achieved an annual sales of 1.6 billion dollars had it limited itself to the yoga market.

Finally, The Bloomberg index that gathers the most-traded Chinese stocks in the U.S. added 0.7 percent to 100.52 Thursday, with online fashion retailer Vipshop Holdings Ltd. On the front foot after jumping 10 percent. “The Chinese look like they’re starting to stimulate their economy,” Dave Lutz, the head of ETF trading and strategy at Stifel Nicolaus & Co., said in an interview with the financial news wire. “That’s lending some optimism,” he added.

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