Mulberry strong despite global volatility, says it wants to reopen in Paris
Mulberry was upbeat on Wednesday as its reported results for the 53 weeks up to the start of April, with a slew of strong figures. And it said that group revenue for the first 12 weeks of the new financial year is 5% ahead of last year, supported by its wholesale business that’s up 29%.
However, there are still some clouds on the horizon and omnichannel — retail and digital — revenue is down 1% in Q1, “largely as a result of Covid-19 restrictions in mainland China, including the closure of the majority of stores and our Shanghai distribution centre”.
The ongoing pandemic issues in China highlight how the global health crisis may seem like a distant memory in many markets, but it remains a problem elsewhere.
And that’s not the only issue. The company expects the business to continue to grow, “albeit at a slower rate given the severe disruption being caused by the geopolitical situation, inflationary pressures, and Brexit-related challenges”.
As to those annual figures, it said group revenue was up 32% to £152.4 million, reflecting a “strong recovery post-Covid-19”. The gross margin reached 71.7%, up from 63.6% a year ago.
UK retail sales increased 36% to £89.8 million having “recovered strongly once stores reopened, and this continued throughout the year”. During the peak trading period, sales exceeded last year, “as we saw the benefits of our made in the UK production supply chain, the relaunch of the Alexa family of products, and our festive marketing campaign. Our strategic decision to focus on full-price sales, was the key driver behind the increased in gross margin”.
Although China has issues at present, last year Chinese retail sales were up 59%. Meanwhile South Korean retail sales rose 11%, “which contributed to the 28% increase in Asia Pacific retail sales, reflecting ongoing development in the region”.
The company didn’t discuss the Europe or US performance so it’s unclear how it’s progressing there, but it said that overall, international retail sales increased 20% to £40.4 million. Retail sales in its ‘Rest of World’ region rose 3% in the year and ROW wholesale/franchise sales surged 44%.
It’s clear that Asia and the UK are its key focuses for now, but that won’t always be so. Mulberry closed its Paris store during the year, but said that “we plan to open a new store in Paris once international tourism returns, in a location that supports our omnichannel approach and customer experience aims”.
Digital sales fell during the year, which is understandable given the shift back to physical retail and away from the heavier focus on digital that was seen during lockdowns and immediately after them. They fell 16% to £47.5 million “as customers switched back to stores”. But they're up 31% compared to the pre-pandemic period.
The company also said profit before tax was £21.3 million. While this includes a one-off profit on the disposal of that Paris lease adding up to £5.7 million, the figure was still significantly ahead of the £4.6 million profit of the previous year.
The company said its global improving performance was due to a strategic focus on full-price sales and increased volume efficiencies, the strength of digital, and new stores.
During the period five new stores were opened in China, and four in South Korea, “further supporting our ongoing growth and development in the Asia Pacific region”.
It added that “business and infrastructure responded well to increased demand following the easing of Covid-19 restrictions” and highlighted the launch of the new Softie bag family in February as a key development.
CEO Thierry Andretta said of all this: “We have made great strides in our mission to be the leading responsible British lifestyle brand, and a pioneer in sustainability.
“The strength of our financial results reflects positive customer response to our product as well as the strategic decisions we have made over the past five years.
“Whilst the economic and geo-political outlook remains uncertain, we are an iconic international brand with a clear strategy for future profitable, cash-generative growth. We remain well placed to continue to deliver sustainable returns to the benefit of all our stakeholders.”
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