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Mulberry Drops its Share Value After Low Profit Performance

Oct 14, 2014 01:08 PM EDT | By Flynna Sarah Molina
mulberry, burberry, British, britain, Michael Kors, prada, gucci, Shares, handbags
(Photo :

Famous bag manufacturer shares dropped following a profit warning, while shares of its competitor, Burberry took a plunge as well

Mulberry shares forgo nearly fifth of their value following sudden profit precaution, while its competitor, Burberry also decreased its value after the warning on markets getting worse.

The company's shares went as low as 18% and Burberry got 4% yesterday, which turned to be the worse drop of the two firms.

Christopher Bailey, Burberry's head is aware of the tougher external factors that will come. Western punishments against rich Russians were implemented amidst the Ukraine issues had affected the demand for high-end products, and protests in Hong Kong, which temporarily ended the operation of entire shops, have worsen the issues on the slump of China, where government has been investigating corruption.

During its fourth quarter warning for the year, Mulberry confirmed that the first six months were tougher than it was expected. There was a significant drop on the sales figures until June.

According to Barclays' analysts, they cut down their annual projected figures to more than half.

Mulberry's executive official said that changing the brand will take two years to fully execute everything. Its previous chief official, failed to position the brand to elite category, together with Gucci and Prada, by setting the price of the bag to 1,000p. This is to get back its target British shoppers. The new executive official promised to launch new collections that will have slightly lower price points. The company has been struggling to compete with other labels such as Michael Kors-high end but with a reasonable price system.

Mulberry pointed out that there was a decrease in traffic that's why their sales went down. Global sales went better compared to local achievement. Sales from wholesale also went down as the Asian and European franchisers placed fewer orders this time.

Burberry, on the other hand, said that there was a double digit increase in their first half income but got warning that wholesale profit will go down to a single-digit rate approaching the end of the year.

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