Nov 7, 2018
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Mulberry loss widens, but Asia and digital are strong

Nov 7, 2018

Anybody looking for clues as to how Mulberry”s half-year has gone would have been receiving mixed messages in the past few months.


A new South Korea deal and a De Rigo eyewear license, plus a tech-focused new London flagship, were all positives. But news that the House of Fraser failure dented its cash flow and that London isn’t the luxury tourist magnet it was a couple of years ago has also dulled its lustre.

Which made its results for the six months to September 30 on Wednesday an intriguing prospect. So how did it do? Not so well. The company’s recovery is still clearly a work in progress as it said that its “international strategy [is] delivering results, [but the] UK market remains challenging.”

Total revenue fell 8% to £68.3m but international retail sales rose a healthy 13% to £12.4m. The UK was profitable but hurt by the HoF administration “and soft retail conditions,” with UK retail sales down 11% and like-for-likes in Britain down 7%.

Retail sales from Asian markets increased by £2.4m but were offset by a fall of £1.3m in Europe and North America as it closed four stores “to fine-tune the store estate.”

Digital is progressing though, with global digital retail sales up 5%, representing 17% of the total now, up from 14% a year ago. And digital sales generated through wholesale partners grew 30% so its combined digital total represents around 20% of its brand sales, up from 15%.


But despite the upbeat elements of all this, theres a sting in the tail with the underlying loss before tax of £3.6m being wider than the loss of £0.6m a year ago. After one-off costs for HoF (£2.1m) and its Korea launch (£2.5m), the reported loss before tax was an even worse £8.2m.

The company is clearly powering ahead outside of its domestic market. Its new Korea and Japan entities mean its own retail network expanded in the period to 29 stores, from just one a year ago, with three more added in the latest half.

And new digital partnerships in China with Toplife, Secoo and VIP.com (plus further agreements planned) are helping its digital advance, while the De Rigo deal will start to yield results from spring 2019.

The company was optimistic about its other product initiatives too. Its Amberley bags continued to perform strongly benefiting from further range development, and group revenue continued to diversify across a number of bag families with a number of new silhouettes launched during the period.

The Artisan Studio continued to provide small quantities of exclusive products, with some recent examples including a unique series of mini Harlow bags for the Korea launch, a Baywater Tote with a Union Jack postman's lock design for the one-year anniversary of the Ginza G6 store, and other exclusive products created to coincide with the new digital concessions with Toplife and Secoo.


However, UK retail like-for-like sales remain sluggish and are down 7% for the six weeks to November 3 so business at home doesn’t appear to have picked up yet. But it will be interesting to see what impact a newly-announced concession agreement with John Lewis & Partners has, the business having previously supplied that retailer via wholesale.


CEO Thierry Andretta stayed optimistic, saying: “We are delivering on the strategy to develop Mulberry as a global luxury brand. In the UK, our most important market [accounting for 68% of sales], we are pleased to have signed a concession agreement with John Lewis, advancing our direct-to-consumer reach.”

And perhaps with Brexit in mind, he added that “we are proud to be the largest manufacturer of luxury leather goods in the UK and remain committed to supporting ‘Made in England’ through our two Somerset factories.”

He also said that he’s confident that the company is getting its international strategy right - and these results don’t contradict that view. But while the firm is generally "well positioned for the Christmas trading period,” as ever, the strength or weakness of that key season “will determine our full-year result,” he concluded.

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