(Adds CEO comments, detail)
By Li-mei Hoang
LONDON, Dec 10 (Reuters) - British handbag maker Mulberry showed signs its plan to win back customers with moreaffordable products was gaining momentum, posting on Thursday a5 percent rise in revenue and an improvement in its profitmargin.
Mulberry, known for its classic leather bags, has spent thepast year reconnecting with its roots in so-called affordableluxury, after an attempt backfired to become more exclusive withbags costing more than 1,000 pounds ($1,517), prompting a stringof profit warnings.
"Trading is up and is in line with our expectations, so weare quite confident it will continue like this," Chief ExecutiveThierry Andretta told Reuters.
The company said total retail sales in the 10 weeks to Dec.5 were up 5 percent on a like-for-like basis, though itacknowledged its full-year results would be dependent on thenext few weeks of trading through Christmas and into January.
"Obviously there are a few important weeks to go betweenrunning up to Christmas and the New Year, but so far so good,"said Chairman Godfrey Davis.
Mulberry said it had seen encouraging sales in its retailstores for the six months ended Sept. 30, which helped offset anexpected decline in wholesale from a slowdown in orders fromAsian retailers and its own distribution controls.
It reported underlying revenue of 67.8 million pounds in thefirst half of its fiscal year and swung to a pretax profit of100,000 pounds from last year's 1.1 million loss.
Gross profit margin increased to 61.5 percent from 59.9percent.
"The second half has started well with the first 10 weeks up5 percent, a good figure in a tough luxury market especially inUK/London," Barclays analysts, who are neutral on the stock,said in a note.($1 = 0.6589 pounds) (Editing by Kate Holton and David Holmes)