Mulberry Group Regulatory News (MUL)

Mulberry Group PLC ("Mulberry")

Trading update

Mulberry Group plc, the English luxury brand, following the recent management changes and a review of the business, is updating the market on trading for the year to 31 March 2014 and the outlook for the current year.

Year ended 31 March 2014

Turnover for the year ended 31 March 2014 will be broadly in line with expectations whilst on an underlying basis, profit before tax is expected to be marginally below current expectations.

Following a detailed review, it has been decided to impair the net carrying value of fixed assets of two US stores, creating a non-cash charge for the year ended 31 March 2014 of £2.7m. This combined with the costs of the recent management change mean that the profit before tax for the year ended 31 March 2014 is expected to be approximately £14 million.

Outlook

Since the appointment three weeks ago of Godfrey Davis as Interim Executive Chairman, a review of operations and strategy has been undertaken with the management team. The primary objective is to reinvigorate sales by the introduction of more affordable new product.

We remain committed to our strategy of international expansion, but the rate of own store openings has been slowed down to five for 2014/15 from eight for 2013/14 in order to control costs whilst existing stores achieve greater traction. The new factory in Somerset, which opened in June, is fully operational with over 300 employees. The last of these joined during April 2014 and now attention is being devoted to their training and maximising production efficiency.

As a consequence of these factors, in particular the pricing strategy, there will be a material adverse impact on profit whilst brand momentum rebuilds. 

Godfrey Davis, Interim Executive Chairman, commented:

"Following the recent change in management, we are focussing on achieving sales growth through the reinforcement of our product offering at more affordable prices to meet the expectations of our loyal customers. This will have short term financial consequences but is necessary to ensure the future strength of the Mulberry brand. The Group remains profitable and cash generative, giving us the resources to invest for the future."

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