Luxury fashion brand Mulberry (LSE:MUL) has seen its stock price plummet to near penny-stock levels, currently trading at around 110p per share, down from 245p a year ago and £24 a decade ago.
Investing in penny stocks like Mulberry comes with higher risks due to their lower market capitalization and greater price volatility. Mulberry is not quite a penny stock yet, but its market cap has significantly decreased to just £63m.
The luxury goods market has been weak, with Mulberry reporting a 4% decline in group revenue for the year ended March. International sales have been slightly better than UK sales, but the company still expects to make a loss for the year.
Management anticipates ongoing challenges in the near future, especially in the Asia-Pacific region where economic conditions have negatively impacted growth. Despite these difficulties, Mulberry has been focusing on expanding its presence in North America and Australia.
While one City brokerage maintains a price target of 308p for Mulberry, representing a 180% increase from the current price, it is important to approach investing in the company cautiously. The future of Mulberry remains uncertain, but there is potential for the brand to regain its former glory in the long run.
As an investor, it is essential to carefully evaluate the risks and potential rewards before considering an investment in Mulberry. The company’s performance will depend on its ability to navigate the challenging luxury goods market and capitalize on emerging trends in consumer behavior.