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(Bloomberg) -- As most of the luxury-goods industry is seeing a revival in demand, growth at bagmaker Mulberry Group Plc is slowing as the U.K. company labors to establish an overseas presence.

The maker of 995-pound ($1,268) Bayswater bags said Wednesday that like-for-like sales advanced 1 percent for the 10 weeks ended June 3, weaker than in previous periods. The stock fell 2.6 percent in London.

The company’s international business was an area for concern, with 10-week retail sales falling 3 percent on a like-for-like basis. Sales advanced at flagship stores in top-tier cities like New York, though secondary locations and outlets in cities with less tourist traffic weren’t always turning out to be “relevant,” Chief Executive Officer Thierry Andretta said by phone. Last year, the brand closed its Washington, D.C., store as well as one in New York.

Growing outside its home market has been a priority for the Somerset, England-based “accessible luxury” brand, whose U.K. retail stores account for more than 60 percent of sales. In April, the company launched a joint venture with its majority shareholder Challice Ltd. to develop its business in China, Hong Kong, and Taiwan.

“International remains the focus,” Andretta said. “We are still fine-tuning our network.”

U.K. Growth

The company’s U.K. business continued to show growth, boosting like-for-like retail sales 2 percent in the 10-week period on the back of increased tourist spending in London. Domestic demand has been softer, it said.

The slowdown at Mulberry is in contrast to luxury industry leaders like LVMH and Kering, which have reported better-than-expected sales on rebounding demand in China and as tourists return to Europe.

Mulberry disclosed the weaker sales growth as it reported a 21 percent gain in pretax profit in the year ended March 31. Full-year revenue rose 8 percent.

“Mulberry’s turnaround remains on track,” Barclays analysts Julian Easthope and Julie Zhuang wrote in a note. “Real progress has been made on product and factory efficiency, which led to a much higher gross margin than we had expected.”

To contact the reporter on this story: Robert Williams in Paris at rwilliams323@bloomberg.net.

To contact the editors responsible for this story: Eric Pfanner at epfanner1@bloomberg.net, Paul Jarvis

©2017 Bloomberg L.P.

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