Sign up UNITED KINGDOM
Proactive Investors - Run By Investors For Investors

Mulberry's first half losses widen but growth in tourist spend eases Brexit concerns

Mulberry sees growth in tourist spend in the UK as a weaker pound following the Brexit vote has made holidays to the nation and its handbags cheaper
Mulberry
Mulberry is best known for its luxury handbags

Mulberry Group PLC’s (LON:MUL) first half losses widened as the luxury handbag maker invested in its overseas expansion.

The company posted pre-tax losses of £609,000 for the six months to September 30, compared to £515,000 a year earlier.

READ: Mulberry in joint venture for Japanese market

Retail sales grew 2% to £56.6mln but fell 1% on a like-for-like basis as a slowdown in the UK market offset strong demand from tourists.

Total revenues, including from wholesale distribution, were broadly unchanged from a year earlier at £74.6mln.

“We continue to see strong demand from tourists in London and whilst the UK remains uncertain, the group remains in a strong position to invest in further developing the customer experience in key international markets and enhancing its unique UK design and manufacturing base,” said chief executive Theirry Andretta.

The company continued its expansion during the period with a focus on Asian markets, including the development of its Japan business.

Operating expenses increased to £46.6mln from £44.6mln, reflecting higher marketing costs and investment in its retail network.

Mulberry switches focus back to affordable luxury

However, gross margins improved by 248 basis points to 61.5% due to less markdowns and a focus on full price sales after returning to its roots as an affordable luxury label following an ill-fated attempt to go more upmarket.

In the first 10 weeks of the second half, retail like-for-like sales rose 1%, including a 1% decline in the UK and a 12% increase in international like-for-like sales.

Shares in Mulberry fell 1.18% to 1,005p in morning trading.

Soft trading but Brexit offers 'silver lining' 

“Mulberry's turnaround isn't going quite as smoothly as hoped. Soft trading reported during the traditionally-slower first quarter has persisted throughout the summer,” said Fiona Cincotta, senior market analyst at City Index.

But she said there is a “silver lining” from Brexit uncertainty as the pound’s weakness is making holidays to the UK and Mulberry's handbags cheaper for tourists to buy.

The company has also managed to strengthen its margins despite a slump in UK consumer confidence, Cincotta said.

“New creative designer Johnny Coca's concoctions are proving to be popular with shoppers, while the company's expansion into Asian markets holds much promise,” she added.

“As oxymoronic as it may sound, Mulberry's 'affordable luxury' branding position is giving the bag-maker some of its mojo back during what is a difficult time for the industry.”

View full MUL profile View Profile

Mulberry Group Timeline

Newswire
January 29 2014

Related Articles

Medical tests
July 11 2017
In an operational update, the medical services and software company said a multi-centre investigator led study comprising data from 607 patients at two academic university hospitals has now been completed
H&T Pawnbrokers store
November 15 2017
“We have delivered a strong trading performance during the second half in the key segments of Pawnbroking, Retail and Personal Loans”

No investment advice

The Company is a publisher. You understand and agree that no content published on the Site constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable or advisable for any specific person. You further understand that none of the information providers or their affiliates will advise you personally concerning the nature, potential, advisability, value or suitability of any particular security, portfolio of securities, transaction, investment strategy, or other matter.

You understand that the Site may contain opinions from time to time with regard to securities mentioned in other products, including company related products, and that those opinions may be different from those obtained by using another product related to the Company. You understand and agree that contributors may write about securities in which they or their firms have a position, and that they may trade such securities for their own account. In cases where the position is held at the time of publication and such position is known to the Company, appropriate disclosure is made. However, you understand and agree that at the time of any transaction that you make, one or more contributors may have a position in the securities written about. You understand that price and other data is supplied by sources believed to be reliable, that the calculations herein are made using such data, and that neither such data nor such calculations are guaranteed by these sources, the Company, the information providers or any other person or entity, and may not be complete or accurate.

From time to time, reference may be made in our marketing materials to prior articles and opinions we have published. These references may be selective, may reference only a portion of an article or recommendation, and are likely not to be current. As markets change continuously, previously published information and data may not be current and should not be relied upon.

© Proactive Investors 2017

Proactive Investor UK Limited, trading as “Proactiveinvestors United Kingdom”, is Authorised and regulated by the Financial Conduct Authority.
Registered in England with Company Registration number 05639690. Group VAT registration number 872070825 FCA Registration number 559082. You can contact us here.

Market Indices, Commodities and Regulatory News Headlines copyright © Morningstar. Data delayed 15 minutes unless otherwise indicated. Terms of use