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Last checked at 
14 Oct 2014 07:00
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MULBERRY GROUP PLC ("Mulberry" or the "Group")
TRADING UPDATE
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Mulberry Group plc, the English luxury brand, is updating the market on trading for the six months ended 30 September 2014 and the outlook for the remainder of the current financial year ending 31 March 2015.
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As reported on 12 June 2014, the company anticipated a challenging year. The first half was expected to be particularly difficult, with it taking some time for the measures implemented after the April management change to take effect. Actual trading conditions have been more difficult than expected, in part due to the continuing headwinds affecting the luxury sector. Whilst sales trends have improved as the period progressed, indicating that the right steps are being taken to restore the business to growth, H1 revenues were down 17% to Β£64.7 million (2013: Β£78.1 million) and profit before tax for the full year to March 2015 is expected to be significantly below current expectations.
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Retail
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The Retail business fell by 9% to Β£45.1 million (2013: Β£49.5 million), with a decline in the UK offset by growth in International markets:
Β· UK full price sales were down Β£2.7 million (-12%) to Β£20.9 million. Sales have been adversely affected by a decline in footfall, particularly tourist shoppers;
Β· UK outlet sales have continued to normalise from unusually high levels during the prior year, when discontinued inventories were being cleared. Outlet sales were down Β£3.0 million (-23%) to Β£10.1 million;
Β· International Retail sales were up Β£1.2 million (+20%) to Β£7.5 million;
Β· Online sales were up Β£0.1 million (+1%) to Β£6.6 million, accounting for 10% of Group sales (2013: 8%).
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Wholesale
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Wholesale sales declined during H1 by Β£9.0 million (-31%) to Β£19.6 million. This decline, which has been greater than anticipated, reflects a combination of inventory reduction and conservative ordering by our Asian and European franchise partners.
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OUTLOOK
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Following the launch of the Tessie bag family during June, we introduced a new family of bags developed with Cara Delevingne at the beginning of September. The reaction to these bag families has been positive and they have contributed to the improving sales trends. The next new product arrives in-store during November 2014 in time for Christmas, with the launch of the new Blossom tote bag, the Mini Lily and a new collection of small leather goods.
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We expect the wholesale sales pattern to continue for the remainder of this year before improving during 2015/16 as partner store sales stabilise and their inventories reduce.
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We maintain tight cost control across the business, albeit with a large proportion of costs remaining fixed. The opening of the Paris flagship store, planned for late Spring 2015, will mark the end of a period of accelerated investment in new stores establishing the foundations for the next phase of growth in both Europe and North America. This investment has involved significant capital investment and increased the fixed costs of the business substantially. Looking forward, the focus will be on growing sales to generate a return on this investment.
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We remain confident that we are taking the right steps to restore the business to growth. As we have explained, we expect that the improvement will be progressive over the medium term.
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GODFREY DAVIS, EXECUTIVE CHAIRMAN, COMMENTED:
"As I explained in June, my first actions on returning as acting chief executive focused upon reinforcing our product ranges. I explained that the impact would be progressive and should produce benefits over the medium term. The new products are beginning to reach our shops with the launch of the Cara Delevingne bags at the beginning of September and with further new product being offered in our shops during November. As expected, the first half has been difficult, but the Group remains profitable and cash generative, giving us the resources to invest for the future. Despite the current challenges, I remain confident that we will build on Mulberry's solid foundations and unique brand positioning in the luxury market to restore growth in the medium term."
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H1 2014/15 | Retail Like-for-like sales | Retail Total sales | |||
10 weeks to | 16 weeks to | 26 weeks to | 26 weeks to | ||
This year vs. last year (%) | 07-Jun-14 | 30-Sep-14 | 30-Sep-14 | 30-Sep-14 | |
UK full price | -12% | -13% | -12% | -12% | |
UK outlet | -24% | -26% | -25% | -23% | |
UK retail total* | -17% | -17% | -17% | -16% | |
International retail total* | -8% | 2% | -2% | 20% | |
Online total | -7% | 3% | 1% | 1% | |
Group retail total** | -15% | -12% | -13% | -9% | |
*regional splits exclude online sales | |||||
**Retail total LFL sales for the 10 weeks to 7-Jun-14 were previously reported | |||||
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The interim results announcement for the six months ended 30 September 2014 is scheduled to be released on 4 December 2014.
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FOR FURTHER DETAILS PLEASE CONTACT:
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Bell Pottinger |
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Daniel de Belder / Joanna Boon | 07977 927142 / 020 3772 2499 |
Mulberry Investor Relations | |
Allegra Perry | 020 7605 6795 |
Altium |
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Ben Thorne / Katie Hobbs | 020 7484Β 4040 |
Barclays | |
Marcus Jackson / Nicola Tennent Β | 020 3134 8370 Β |
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