Buoyant Mulberry Sees Strong Recovery in First Half, Starts Second Half on a Positive Note
Luxury British fashion brand, Mulberry, has announced positive results for the first half of the year, signaling a strong recovery from the challenges of the pandemic. CEO Thierry Andretta expressed confidence in the company’s strategic decisions and highlighted its focus on UK production capabilities, which have positioned Mulberry well for the upcoming festive trading period.
During the 26-week period ending on September 25, Mulberry saw a significant increase in group revenue, with a 34% year-on-year growth to £65.7 million. This represents a 3% increase compared to 2019 on a comparable basis. The company also reported pre-tax profit of £10.2 million, a significant improvement from the £2.4 million loss recorded in the previous year. However, it is important to note that these figures include a one-off profit of £5.7 million from the disposal of its Paris store lease.
Furthermore, Mulberry’s underlying profitability has strengthened, with a gross margin of 69%, compared to 59% in the previous year. This improvement can be attributed to the brand’s strategic focus on full-price sales and increased volume efficiencies. Retail sales played a significant role in this growth, rising by 30% to £55.6 million. Domestically in the UK, retail sales increased by 36% to £38 million, rebounding strongly after the reopening of stores. Although Mulberry experienced a decline in sales from the absence of tourists in Britain and store rationalization in Europe, this was offset by robust growth in Asia.
Mulberry’s performance in China, in particular, was remarkable, with a 38% increase in retail sales. Asia Pacific retail sales rose by 23% to £11.8 million, reflecting Mulberry’s ongoing investment in the region. However, regional and local lockdowns in South Korea and Japan had a disruptive effect on sales. In the US, retail sales surged by 57% to £3.3 million, indicating a strong recovery in the international market. Nevertheless, international retail sales as a percentage of group revenue decreased slightly from 41% to 40%, underscoring the ongoing impact of the pandemic in the first half of the year.
Franchise and wholesale sales also experienced robust growth, increasing by 67% to £10.1 million, suggesting that the recovery is gaining momentum. While digital sales declined by 19.1% compared to the previous year due to the reopening of physical stores, they still accounted for 29% of total group revenue. Mulberry has observed a significant shift towards digital and omnichannel shopping across all regions. In Asia Pacific, digital sales represented 19% of the region’s total, supported by local fulfillment in Japan and the establishment of strategic partnerships, such as T-Mall in China. China’s digital sales grew by 22% and constituted 43% of total sales in the country. In July, Mulberry also launched a WeChat program in China, coinciding with the Alexa x Alexa launch.
The positive momentum of Mulberry’s recovery extends beyond the first half of the year. Retail revenue in the eight weeks leading up to late November increased by 35% compared to the same period last year. The company has witnessed improving store sales, a strong digital performance, and continuing growth in Asia during October and November. Given the strong performance in the first half and the company’s substantial cash reserves, Mulberry plans to progressively increase marketing expenditure in the second half to further enhance brand awareness worldwide.
Mulberry has also made notable strides in sustainability and modernization. The company has implemented projects to update its legacy systems and develop next-generation digital and omnichannel platforms. These initiatives are anticipated to drive increased capital spending in the coming years. Fortunately, Mulberry currently possesses sufficient cash reserves to support these endeavors. The company’s revenue has consistently exceeded its original forecasts, and it maintains a cash position that surpasses expectations.
Overall, Mulberry’s impressive first-half results are an encouraging sign of its recovery from the challenges posed by the pandemic. With a strategic focus on UK production capabilities, strong sales performance, and plans for future brand development, Mulberry appears well-positioned to thrive in the post-pandemic fashion landscape.
Useful links:
1. Mulberry Official Website
2. Business of Fashion – Mulberry Charts Course to Recovery with Shift to Asia
