Mulberry sales hit by economic downturn

Mulberry has issued a profits warning after economic worries stalled London sales and prompted the closure of its Tokyo store.

Like-for-like sales in the UK for the 11 weeks to December 15 are running 8% lower after increasing by 7% in the previous six months.

Mulberry said there had been a significant reduction in London trade since the September 11 terrorist attacks.

The Bath-based company's only store in Japan is also incurring losses as the country remains gripped in recession.

The announcement today to close the store, coupled with the downturn in UK business, will leave the group's financial performance "significantly" short of market expectations in the year to March 31.

Shares in Mulberry, which has a portfolio of 30 outlets worldwide, fell 6% following the announcement.

Despite the warning, Mulberry is to continue refitting stores in the style of its recently reopened outlet in London's Bond Street.

A new store due for the spring in Brompton Road will also reflect work made in the last year by design consultants to revamp the brand's image.

Mulberry, which plans to open a store in Manhattan next year, is hoping to match the revival of other upmarket brands such as Burberry and Aqua Scutum.

The developments come as figures for the six months to September 30 showed sales increased 14% to £12.1m despite the 16 week closure of the Bond Street store.