Mulberry, the luxury accessories brand, has released its financial results for the first half of the year, which show a slight decline in sales and a shift to a pre-tax loss. Despite these challenges, the company remains optimistic about its performance, characterizing it as “resilient.” During this period, Mulberry saw a 1% decrease in group revenue, with UK retail sales dropping by 10% due to the difficult economic climate. However, retail sales in China experienced a 6% increase, despite the impact of Covid-19 restrictions, contributing to a 1% growth in Asia Pacific retail sales. International retail sales remained unchanged, while digital revenue decreased by 15% as consumers returned to physical stores.
Although Mulberry faced a decline in revenue from its stores, franchise, and wholesale channels, there was a significant 32% increase in revenue from these areas. The company’s gross margin also improved from 69% to 71%, thanks to a focus on full-price sales and increased operational efficiencies. However, these positive factors were overshadowed by a pre-tax loss of £3.8 million, compared to a profit of £10.2 million in the previous year. This loss was mainly attributed to one-off items and additional investments made by the company.
Despite the challenges, CEO Thierry Andretta remains confident in Mulberry’s ability to carry out its strategy and make investments across the organization. He highlights the company’s unique brand identity and commitment to sustainability as key differentiators in the market. However, Andretta also emphasizes the need for the return of tax-free shopping for international tourists, as the absence of these shoppers has significantly impacted sales, especially at the flagship Bond Street store.
Looking ahead, there are positive indications in Mulberry’s retail revenue, with an “improved trend” observed in the eight weeks leading up to November 26th. The company’s gross margin in the second half is expected to remain consistent with the first half, and it has recently opened a new store at the Battersea Power Station mall. Furthermore, the acquisition of stores in Australia and the launch of Mulberry Sweden have bolstered the company’s direct-to-customer model.
Despite the decline in digital sales during the first half, they still accounted for 25% of Mulberry’s total revenue, highlighting the brand’s strong online presence. The company’s international growth was further supported by the launch of digital platforms in South Korea.
Mulberry is well-prepared for the upcoming holiday trading season and anticipates a strong second half. However, it acknowledges the ongoing uncertainty in the economic and geopolitical landscape, which could potentially impact its future performance. Nevertheless, Mulberry remains confident in its ability to navigate challenges and continue to drive the business forward for the benefit of all stakeholders.
Overall, despite the dip in sales and pre-tax loss, Mulberry’s financial results demonstrate resilience and a strong position in the luxury accessories market. The company’s strategic investments and focus on sustainability set it apart from competitors, and its commitment to adapting and innovating in response to changing consumer behaviors positions it well for future success.
Useful links:
1. Mulberry Official Website
2. Reuters Article on Mulberry’s Financial Results
