Mulberry’s revenue up but profit slides

Worldwide
Published:  12 December, 2016

Total revenue for British leather goods brand Mulberry for the six months ended September 30, 2016, was up 10% to £74.5 million (US$93.77 million), but pre-tax loss was more significant as a result of increased product investment.

Mulberry’s turnover for the six months September 30 has risen to £74.5 million (US$93.77) from £67.8 million (US$85.36 million) for the same period of 2015. According to the company, total retail sales for the 10 weeks to December 3, 2016, were up 4%.

Digital sales were up 32% in the period, accounting for 14% of Group Sales, against 12% in 2015. Thanks to a new strategic initiative, inventory is reported to have been reduced to £43.7 million (US$55.04 million) against £47.7 million (US$60.08 million) in 2015.

Loss before tax was £0.5 million (US$630,000) compared with a pre-tax profit of £0.1 million (US$126,000) in the corresponding period of 2015. The company attributes this result to increased product investment of around £1 million (US$1.26 million) and additional foreign exchange costs on overseas subsidiaries of about £4 million (US$5.09 million).

“Increased investment in the customer experience, creative talent and product design with the new Mulberry collection meeting expectations and broadening brand interest have driven performance”, says a company statement.

The international development strategy is said to have progressed with the creation of a recently announced, majority-owned, new business across China, Hong Kong, and Taiwan. Tourist spending is reported to have benefitted London, although domestic demand has softened in the recent weeks.

“Mulberry's new collection under the creative direction of Johnny Coca has been well received by our existing customers and a new audience. We have strengthened our balance sheet with tight inventory management leading to strong cash generation, enabling us to invest in international development and new products”, says Mulberry.

For the full year to March 31, 2017, the Group said it anticipates additional costs of around £1 million (US$1.26 million) due to foreign exchange movements, and an additional £2 million (US$2.51 million) for strategic investments into North Asia.

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