Mulberry revenue down 29 % for H1 as coronavirus impacts sales

By guest author Ava Szajna-Hopgood from Retail Gazette

  • Mulberry reports back on difficult first half, impacted by temporary store closures due to coronavirus
  • Digital sales rose 68% to GBP 24.3 million
  • CEO says there are “many obstacles ahead” for Mulberry, citing changes to tax-free shopping
Caption courtesy by Retail Gazette

Group revenue at Mulberry fell 29 %  in the half year to September 26, with coronavirus and the impact of store closures weighing heavy on results.

The luxury British fashion brand saw revenue to drop £48.8 million across the 26 weeks to the end of September, down from GBP 68.9 million for the same period in 2019.

The decline was attributed to the impact of coronavirus and the fact the majority of Mulberry’s stores had been closed from the start of the period.

Despite the difficult trading conditions, Mulberry said it had managed to improve its adjusted loss before tax in the first half to £1.09 million, after posting a loss of £10.1 million in 2019.

The accessories brand said this reflected actions taken in response to coronavirus and strong growth in its Asian markets, alongside the strength of its digital business.

Digital sales rose 68 %  for the first half, to GBP 24.3 million, compared to GBP 13.9 million in 2019.

Sales in Asia Pacific were up 28 % , attributed to ongoing investment in the region

Mulberry said it ended the period with a net cash increase of £8.6 million, up from GBP 6.4 million in 2019, thanks to “rigorous cost and cash control”.

The company said its sales trajectory was improving, with sales down 39 %  in the first quarter, moving up to a 18 %  decline in the second quarter.

The group said it expected the sales trends experienced in its second quarter to continue into October, with trading in the eight weeks to November 21 down 19 %  year-on-year.

“I am proud that in spite of the devastating effects of the global pandemic, we have made further progress on our long-term strategy to build Mulberry as a sustainable global luxury brand,” chief executive Thierry Andretta said.

“We cannot avoid the fact that the damage the coronavirus has caused to business, decimating high streets and the tourism industry, is severe. For this reason, in order to ensure that the business was able to navigate through this difficult time, we took the painful decision to implement a far-reaching cost reduction and optimisation programme.

“As we look to the future, we remain confident in our strategy and in the relevance and durability of the Mulberry brand. There are of course many obstacles ahead, not least the upcoming changes to tax-free shopping in the UK that could hamper the wider retail and economic recovery, but we are grateful to be able to open our doors again in England on 2 December and to be able to trade across all our platforms in this crucial Christmas trading period,” Andretta added.

The trading update comes a week after Mulberry was placed into an offer period due to Mike Ashley’s Frasers Group raising its stake in the luxury retailer.

Last week Frasers Groups increased its stake to 36.8 % after acquiring 4.3 million shares from Kaupthing in a deal worth GBP 6.45 million.

Under the panel’s rules, the Frasers Group has 28 days, until December 17 to announce a firm intention to make an offer for the company.