Luxury British brand Mulberry (LON:MUL) have announced plans to expand into the South Korean market, as it looks to offset weak sales.
Pre-tax profit fell 8 percent to £7.5 million, primarily due to startup costs of the group’s planned Asian expansion, with revenue rising modestly by 1 percent to £169.7 million.
Excluding these costs, pre-tax profit from existing business grew 36 percent to £11.3 million.
In particular, the UK market remained week, with the group posting a 9 percent fall in sales as a result to “lower footfall and fewer tourists, as more widely reported”.
As a result, Mulberry is set to boost its profitability by looking to expansion in Asia, and in particular in South Korea.
As part of the plans, the company will set up a new arm in South Korea in collaboration with SHK, investing £4.6 million to establish Mulberry Korea.
Mulberry will own 60 per cent of the share capital of the newly created entity, with SHK owning the remaining 40 per cent stake, and it is expected to start trading by autumn 2018.
Mulberry Korea will establish its head office in South Korean capital Seoul. The accessories brand is anticipating costs of £3 million relating to the new venture.
Chief Executive Thierry Andretta also acknowledged the potential impact of House of Fraser closing various locations with Mulberry concessions.
He said: “It’s a pity that they are closing their Oxford Street store, but in Oxford Street we today have Selfridges, we have John Lewis,”
“We will soon have Regent Street and we have Bond Street. The impact of their closing on us will be close to zero.”
Mulberry dominated the fashion world back in 2010 with the release of the remarkably popular ‘Alexa’ satchel bag, which was once constantly seen on the arm of its many celebrity fans.
However, subsequent efforts to elevate the label into the high-end designer market ultimately alienated Mulberry’s traditional customer base, in turn shrinking profits.
Since the departure of Emma Hill, Mulberry have in recent years attempted to re-define their aesthetic alongside rethinking its price points.
The brand announced their new creative director back in 2014, Céline’s Johnny Coca, who is to oversee the re-generation of the British brand.
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