Buoyant Mulberry sees first-half recovery, second half starts well

By

Sandra Halliday

Published
Nov 24, 2021

Mulberry delivered good news on Wednesday as it said it saw further strategic progress amid strong consumer demand in the 26 weeks ended September 25. And CEO Thierry Andretta said that the “bold decisions we have taken with regards to focusing on our UK production capabilities mean that we are well placed for the festive trading period and beyond”.

It's good news for the company that has seen plenty of downs as well as ups in recent years and points to a strong recovery from the pandemic.

In the period, group revenue rose 34% year-on-year to £65.7 million (also up 3% compared to 2019 on a comparable basis). And pre-tax profit rose to £10.2 million from a loss of £2.4 million a year earlier, although the latest figures did include a one-off profit on the disposal of its Paris store lease amounting to £5.7 million.

But despite that extra boost, the company is clearly becoming more profitable on an underlying basis and its gross margin rose to 69% from 59% a year earlier due to its strategic focus on full-price sales and increased volume efficiencies.

Overall during the period, retail sales rose 30% to £55.6 million. In its domestic UK market, they increased by 36% to £38 million. Sales in the UK “recovered strongly once our stores reopened”, it said. And the sales lost from the absence of tourists in Britain — as well as the rationalisation of stores in Europe — were replaced by strong growth in Asia.

That was clear as China retail sales increased a powerful 38%, which contributed to the 23% increase in Asia Pacific retail sales to £11.8 million, “reflecting ongoing investment in the region”. That said, South Korea and Japan were “disrupted to some extent by regional and local lockdowns in the period”. And US retail sales increased an even bigger 57% to £3.3 million, although international retail sales represented a smaller 40% of group revenue compared to 41% a year ago, showing that the pandemic was still making an impact in H1.

It was also encouraging that franchise and wholesale sales increased 67% to £10.1 million, again suggesting that the recovery has kicked in. 

And while digital sales were understandably lower than a year ago (down 19.1%) given the reopening of physical stores, they still made up 29% of total group revenue.

The firm has seen an accelerated shift to digital and omnichannel shopping across all regions. In Asia Pacific, digital sales grew to 19% of the region's total, supported by local fulfilment in Japan and the development of strategic partnerships, including T-Mall in China. Digital sales in China grew 22% and represented 43% of total sales there. In July, it also launched a We Chat programme in the country, which coincided with the Alexa x Alexa launch.

The firm’s recovery doesn’t appear to be running out of steam at present either with retail revenue in the eight weeks to late November up 35% compared to the same period last year. The company has seen improving store sales, a strong digital performance and continuing growth in Asia during October and November. 

And in view of “the strong performance in the first half and the group's substantial cash reserves, a progressive increase in marketing expenditure is planned in the second half to continue building brand awareness worldwide”.

The company has been working hard to boost its sustainability and has made major progress on that front. It has also advanced as far as modernising certain aspects of the business concerned. Projects are in place to move the group's legacy systems forward, and to develop the next generation of digital and omnichannel platforms. This is expected to lead to increased capital spending next year and beyond.

The company seems to have the cash available to carry this through. After the first half, its increased revenue has continued to be above its original base case forecasts “with a cash position materially ahead of assumptions”, it said.