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Mulberry returns to full-year profit despite drop in revenue

By Huw Hughes

21 Jul 2021

Business

Image: Mulberry

Mulberry has returned to a full-year profit despite a drop in sales linked to international store closures and a drop in tourism.

For the year to March 28, the British luxury label reported an underlying profit before tax of 5.9 million pounds compared to a loss before tax of 14.2 million pounds a year earlier.

Group revenue during the year was down 23 percent to 149.3 million pounds as the pandemic forced the majority of the label’s physical stores to closure during the period.

But that drop in sales was partially offset by soaring digital sales, which were up 55 percent to 56.4 million pounds in the year, representing 49 percent of total revenue compared to 24 percent a year earlier.

The company also managed to improve margins due to lower markdown sales.

China drives international sales

International retail sales were up 4 percent to 33.8 million pounds, driven by strong growth in Asia Pacific, which was up 36 percent. China retail sales soared by 81 percent and South Korea retail sales were up 36 percent. Rest of World retail sales dropped 27 percent.

In terms of current trading, the company said its revenue is 45 percent ahead of last year, with retail revenue 30 percent ahead thanks to a strong recovery in the UK and continued strong growth in Asia, with China retail sales up 46 percent.

CEO Thierry Andretta hailed the company’s “robust” performance and said it has made “good strategic progress” in becoming a “leading sustainable global luxury brand”.

“We have been able to leverage our leading omnichannel position, achieving very strong growth in Asia, and have served the communities in which we operate, including repurposing our factories to produce over 15,000 reusable PPE gowns for frontline NHS workers,” he said in a release.

Mulberry cuts costs as revenue falls

Mulberry implemented a number of cost-cutting measures during the pandemic, including a 25 percent cut to its global workforce announced last June. On top of that, the brand reduced discretionary costs, froze pay and recruitment, and enforced a temporary 20 percent pay cut for PLC directors.

Overall, these actions achieved a 32 percent reduction in operating expenses on a full-year basis.