LUXURY goods group Mulberry said it was on track for a return to the black after a fall in losses.

The company, which generates about 70 per cent of its business from the sale of accessories, benefited from a cost-cutting drive which saw overheads reduced by £700,000.

Sales reduced during the six months to September 30 by nine per cent to £12.1m, but Mulberry said trading since then had been encouraging, with an improvement of three per cent in like-for-like sales. As part of the attempt to drive down costs, three stores have been closed in recent months, leaving Mulberry, based in Bath, with 24 outlets in the UK and Europe.

Chairman and chief executive Godfrey Davis said: "After two difficult years, we have made progress in returning the group to profit.

"Operating losses for the period have been halved and stock levels reduced."