Mulberry books profits on positive retail sales

by Prachi Singh
16 Jun 2016

The Mulberry Group delivered improved results for the year to March 31, 2016. The company said profit before tax was 6.2 million pounds (8.7 million dollars) against 1.9 million pounds (2.6 million dollars) last fiscal year, driven by growth in retail sales. Retail sales were up 8 percent to 118.7 million pounds (168.1 million dollars) against 109.9 million pounds (155.6 million dollars) last year with like-for-like sales increase of 8 percent.

“Mulberry has made significant progress during the last financial year with solid growth achieved in revenues and profit. The first collection introduced by our new Creative Director, Johnny Coca, has been well received by both the UK and international press and partners. Our UK manufacturing base, which produces 50 percent of our bags, has remained a core strength and point of distinction,” said Thierry Andretta, CEO of Mulberry.

Detailed review of the financial performance

UK retail sales including digital were up 9 percent with like-for-like sales up 9 percent for the year to 97.4 million pounds (137.9 million dollars). International retail sales including digital were up 3 percent and 2 percent on like-for-like basis to 21.3 million pounds (30.1 million dollars). Digital sales were up 19 percent accounting for 14 percent of Group sales.

During the year, the company opened doors to the Paris flagship store, replacing the previous, smaller one in Paris, while three stores were closed in the US at San Francisco, Short Hills and New York Bleecker Street. There were 67 directly-operated stores as of March 31, 2016, three less than the previous year.

Wholesale sales for the year were 37.2 million pounds (52.6 million dollars), which the company said reflected challenging local market conditions in Asia, as well as action taken to improve the quality and image of the brand's wholesale distribution network. The franchise store network at the year-end had a total of 55 stores in Asia, Europe and the Middle East.

Reports rise in profit gain

On an adjusted basis, profit before tax was 6.8 million pounds (9.6 million dollars) against 4.5 million pounds (6.3 million dollars) last fiscal. Profit before tax was 6.2 million pounds (8.7 million dollars) compared to 1.9 million pounds (2.6 million dollars) last year.

The Group generated a profit after tax of 2.7 million pounds (3.8 million dollars) resulting in earnings per share for the year of 4.5p against the loss reported last financial year. Adjusted earnings per share was 5.4p compared to 2.1 p in 2015.

The Board of Mulberry seeks to balance paying dividends to shareholders with investing in the business. The Board remains confident of the medium term outlook and is recommending the payment of a dividend of 5 p per ordinary share.

Current trading and outlook

According to Mulberry, Group sales are expected to continue to grow during the year to March 31, 2017 as the new collection, produced under the creative direction of Johnny Coca, reaches the market. The digital and omni-channel sales channels are expected to continue to grow in importance within the business.

The first 11 weeks' trading of the current financial year covers the end of the Spring Summer 2016 season, during which few products were introduced ahead of the launch of Johnny Coca's first Mulberry collection, Autumn/Winter 2016. Total Retail sales for the 11 weeks to June 11, 2016 were up 9 percent relative to the same period last year with like-for-like retail sales rise of 4 percent.

The Group will focus on improving productivity in existing stores with limited new store openings. Omni-channel has been rolled out to France, Germany and the Netherlands during April, with plans to launch these services and local fulfilment in the US during summer 2016. On April 29, 2016, the Group assumed control of the Mulberry store in Sydney, Australia from its long-standing distribution partner, Club 21. As a result, Mulberry now directly manages its sales and limited wholesale operation in Australia. The Wholesale business is expected to remain steady during the current financial year.