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Jun 19, 2019
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Mulberry makes progress in transformational year, despite losses

Jun 19, 2019

It was a mixed (luxury) bag of results for Mulberry in a transformational period, the 53 weeks to the end of March, with the British company saying its international business developed, its direct-to-customer (D2C) strategy made progress, but the UK market was challenging.


And a quick look at its headline revenue figures underlined just how mixed it was as its international revenue rose 7% to £48.1m, but its UK revenue was down 6% to £121.6m.

So what did that all mean in total? Revenue fell overall, dropping 2% to £166.3m, and given that the company was comparing a 53-week year with a 52-week one, the revenue drop would have been a worse 3% if it was a straight 52-week comparison. 

Adjusted pre-tax profit plunged from 2018’s £8m to just £1m this time. That was understandable given that the adjusted figure contained £6m worth of costs such as South Korea launch expenses, a profit write-back on the conversion of John Lewis from a wholesale to concession business model (more of that later), House of Fraser administration write-offs and more.

Reported pre-tax profit was also weak, swinging to a loss of £5m from a profit of £6.9m a year ago.

Yet trading does appear to have improved recently. Retail total sales are up 13% for the 11 weeks to June 15, with international up an astonishing 31% and even the weak UK market up 7%. Digital has risen 53% in the period. The company has been boosted by the fact that it launched a new global concession on Farfetch in April and also the opening of new stores in New York City and Dubai based on its new store concept, as well as other initiatives. 


Back with last year, there was certainly a lot going on at Mulberry to drive its turnaround, although some negative issues, like the HoF failure and general weak consumer sentiment in Britain, got in the way. The big picture was all about the company working to establish more direct control over its distribution, either through its own retail development or major partnership deals.

To this end, it established new subsidiaries in Japan and South Korea (and, as mentioned, costs linked to this dented the bottom line). But it seems to be worth it as it said the new businesses in Asia really drove revenue growth last year and international represented 31% of group revenue for the period, up from 28%.

Mulberry also managed to drive its digital sales up by an impressive 27%, helped by the introduction of “important partnerships” in China such as Secoo and Tmall, as well as by its presence on John Lewis’s webstore. More recently, the launch of that Farfetch deal has also kicked in. Digital revenue now accounts for 22% of total turnover, up from 17% a year ago. 

And talking of John Lewis, the company’s D2C strategy was bolstered last year through the “successful” conversion of that chain from a wholesale to aconcession-based retail model. The result is that around 90% of group revenue is now generated through Mulberry’s own  channels and it said the John Lewis concessions have “performed ahead of expectations.”


This conversion is really helping the UK performance. Mulberry said that it was hit at home last year by the HoF issue and the weak UK market, but the John Lewis move “allowed the group to recover a significant proportion of lost revenue associated with the House of Fraser disruption.”

Other developments in the last year included the launch of its eyewear collection under license.

CEO Thierry Andretta said the company believes international and digital sales will continue to grow while UK retail trading conditions are “expected to remain uncertain.” He added that "the group plans to invest further in its new Asian entities during this development phase, enhance its global digital platform and optimise the UK network.” Investment in international markets will be focused on brand development and leveraging the group's digital and omnichannel network and the recently established digital partnerships.

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