By Neil Maidment
LONDON (Reuters) - British handbag maker Mulberry (L:MUL) said on Thursday a return to more affordable prices had boosted sales in the first few weeks of its new financial year after an ill-fated move upmarket led to a 74 percent fall in full-year profit.
Mulberry has spent the past year reconnecting with its roots in affordable luxury after an attempt to become more exclusive backfired, prompting a string of profit warnings and the departure of Chief Executive Bruno Guillon.
The company, known for its classic leather bags, has been trying to win back customers in Britain put off by its attempt to shift upmarket with bags costing more than 1,000 pounds.
Mulberry said on Thursday a tighter grip on costs and the change in strategy had helped revive sales since November.
"I think the figures show the strategy we have been adopting is working, regaining our core UK customers," Chairman Godfrey Davis told Reuters. He said 66 percent of Spring/Summer 2015 bags were now priced under 1,000 pounds versus 45 percent in 2014.
Mulberry's pretax profit for the year to March 31 plummeted to 4.5 million pounds. Wholesale revenue was down 29 percent on lower demand.
Retail revenue rose 1 percent, but recovered strongly in the second half of the year thanks the move to sell more of the company's 500-1,000 pound priced bags.
That sales trend had continued into its new fiscal year, Mulberry said, with total sales up 17 percent for the 10 weeks to June 6, and up by 15 percent on a like-for-like basis.
Shares in Mulberry were flat at 905 pence by 0743 GMT. They are up 28 percent on a year ago.
The firm's new CEO Thierry Andretta, who joined in April, said he was pleased the new strategy was beginning to bear fruit and told Reuters he would not make major changes.
His first focus will be to bring the more affordable price structure to Mulberry's shoes and ready-to-wear categories.
The company said it expected wholesale revenue to stabilise in its new fiscal year, with order books now in line with expectations. But it did predict higher operating costs due to the opening of new stores, rent reviews and a new management team.
Johnny Coca joins Mulberry from France's Celine as creative director on July 8 and is expected to have his first collection in stores in June next year.