LONDON (Reuters) - British luxury handbag maker Mulberry (L:MUL) said full-year pretax profit would be significantly below expectations after a slump in first-half trading added to the disruption of a product overhaul.
Mulberry had warned in June of a tough year ahead as it shifts to a lower price strategy following an ill-fated attempt to move upmarket that hit sales and led to chief executive Bruno Guillon's exit in March.
On Tuesday, in the latest in a string of profit warnings, the firm said tougher than expected trading conditions had added to its woes, with falling levels of tourist shoppers hurting its core UK business.
Revenues for the six months to Sept. 30 fell 17 percent to 64.7 million pounds, the firm said, with retail sales down 9 percent and wholesale sales down 31 percent.
Analysts at Barclays slashed their full-year pretax profit forecast by 60 percent to 4 million pounds. That compared with 14 million pounds a year ago, itself a near halving from the year before.
"Moving the brand to higher pricing points had clearly taken its toll on sales with the group responding by reverting back to its roots," the Barclays analysts said in a note, adding they expected new bag launches to help the firm's second-half trade.
Mulberry, like rivals Louis Vuitton and Gucci (PA:PRTP), is struggling to compete against more accessible, trendy fashion brands such as Michael Kors which give customers the look and feel of luxury at a fraction of the price.
To better compete, the firm is strengthening its product offering at a price range of 500-800 pounds.
Mulberry said sales trends had improved over the first half, indicating it was taking the right steps to restore the business to growth.
The firm added its flagship Paris store, due to be opened early next year, would mark the end of its investment in new stores, which has seen it expand its footprint globally.
(Reporting by Neil Maidment; Editing by Mark Potter)