* Mulberry profit warning is second in 6 months
* Sees FY profit of 26 mln stg vs f'cst 31.2 mln stg
* Bang & Olufsen also cuts revenue outlook
* Mulberry shares fall 17 pct; B&O, Burberry down too
(Adds analysts comments, background)
By James Davey
LONDON, March 22 British handbag maker Mulberry
warned profits would be hit this year, partly blaming a
fall in spending by tourists who have been crucial to the luxury
industry's ability to grow in a flagging European economy.
Danish luxury stereo and television maker Bang & Olufsen
also cut its revenue outlook on Friday, adding to
jitters in the sector.
Luxury brands like Hermes and Gucci,
have largely coped with an ailing European economy thanks to
strong demand from Chinese buyers, both in their home market and
when travelling abroad.
Smaller brands like Mulberry are finding it more difficult
to entice tourists from rival stores, especially when they
become picky. They have been introducing bolder designs to tempt
more fashion-savvy customers and have even been raising prices
to attract those looking for something more exclusive.
"In times of a soft economy, consumption focuses on edgy
brands and quality rather than on accessible luxury," said Mario
Ortelli, senior analyst at Bernstein Research.
Mulberry shares closed down 17 percent and Bang & Olufsen's
off 15 percent.
Shares in Britain's largest luxury brand Burberry,
which like Mulberry relies heavily on tourists in its London
stores, closed 4 percent lower, one of the biggest declines by a
European blue-chip company.
"I see more risks for a brand like Burberry - which is still
in transition from accessible to aspirational luxury and has
already higher prices than Mulberry - rather than for exclusive
brands like Chanel or Hermes," Ortelli said.
Mulberry said pretax profit for the year ending March 31 was
likely to drop 28 percent to 26 million pounds, on revenue of
165 million pounds.
That compared with analyst forecasts for pretax profit of
31.2 million pounds and revenue of 177.4 million, according to
Mulberry, which sells Bayswater handbags for around 1,400
pounds ($2,100) and mint green cotton tweed coats for 1,750
pounds, also issued a profit warning in October, blaming a
slowdown in Asian demand.
It said retail sales over the Christmas period were broadly
in line with expectations but deteriorated over the last 10
weeks, including a drop in tourist spending at London stores.
Luca Solca, head of Luxury Goods at Exane BNP Paribas, said
Mulberry's warning was also the result of its current transition
towards a retail-focused business.
The company said retail like-for-like growth for the year
was likely to be about 6 percent, while wholesale sales were
expected to be down 15 percent.
The wholesale drop reflected a planned move to limit the
amount of stock going into lower quality wholesale accounts with
the aim of growing the Mulberry brand's value in the long-term,
as well as lower than expected in-season ordering.
"Mulberry is a very small brand, more exposed to
volatility," Solca said. "Repositioning takes time," he said.
The firm said the order book for autumn/winter 2013 was
Other luxury brands have reported a slowdown in London trade
as a result of fewer tourists.
According to Britain's Office for National Statistics,
visits to the country by overseas residents fell by 1 percent in
January, following two strong months in November and December.
"It's (shopper numbers) about 30 percent less than last
year, some days 60 percent," said Paulina Rajnert, an
administrative manager at Miu Miu's New Bond Street store,
noting most of the reduction was due to fewer tourists.
Mulberry has recently been subject to takeover speculation.
Earlier this month French luxury group Hermes denied a press
report that is was mulling a bid.
Analysts at Barclays cut their profit forecast for 2012-13
to the company guidance and their forecast for 2013-14 to 30
million pounds from 39.8 million.
Separately on Friday, French group PPR unveiled
plans to rename itself "Kering" as part of its transformation
from a retail conglomerate to a luxury and sporting goods group.
($1 = 0.6588 British pounds)
(Additional reporting by Clare Hutchison and Antonella Ciancio;
Editing by Mark Potter and Elaine Hardcastle)