Mulberry bounce-back starts, swings to profit despite lower sales
Mulberry group had some good news on Wednesday as it released its preliminary results for the year to March 27, showing that it coped reasonably well with the pandemic and that since the end of the period it has started to bounce back.
In fact, it said group revenue since the financial year-end is 45% ahead of last year, with retail revenue 30% ahead “due to a strong recovery in the UK, and continuing growth in Asia, with China retail sales up 46%”.
But while the board expects the positive momentum to continue, sales in the current year “may remain below their pre-Covid-19 levels, in part due to the rationalisation of the store network”.
Looking at the last financial year, the company talked of strong growth in Asian markets and a robust digital performance. But it's no surprise that revenue still fell, dropping 23% to £115 million from £149.3 million a year earlier. This reflected the impact of the pandemic and the temporary closure of stores during the period.
Importantly, digital sales were up 55% to £56.4 million. Online sales represented 49% of its total revenue in the year, up from 24% previously.
It also improved its margins due to a lower level of markdown sales.
And international retail sales rose 4% to £33.8 million. Its growth in Asia-Pacific was a healthy 36%, driven by ongoing development in the region. Retail sales in China rose 81% and in South Korea they were up 36%. However retail sales in the rest of the world were down 27% as the pandemic took its toll.
Gross profit also fell to £73.1 million from £91.1 million in the previous year, partly boosted by much smaller impairment charges this time. That said, the company had other higher costs to deal with linked to restructuring and the closure of stores.
But the best news was that the operating result was a profit of £10.3 million underlying or £8.9 million reported. This compared with an underlying operating loss of £9.3 million a year earlier and a reported loss of £43 million. Pre-tax profit was £4.6 million this time after a loss of £47.9 million in the prior year.
CEO Thierry Andretta said of all this: “We have been able to leverage our leading omnichannel position, achieving very strong growth in Asia, and have served the communities in which we operate. We have delivered a robust financial performance and have made good strategic progress in our journey to build Mulberry as a leading sustainable global luxury brand.”
Its performance in the period was helped by new digital-first marketing campaigns as the company approached and entered its 50th anniversary year, as well as key product development.
For instance, November 2020 saw the “highly successful relaunch of a new, sustainable version” of its Alexa bag. The 360-degree global campaign “engaged VIP customers and focused on localised influencer seeding, content collaborations and targeted media partnerships”. The relaunch was further supported by an “impactful partnership and content collaboration with luxury online retail platform, Farfetch. The campaign drove widespread conversation and has ensured the iconic silhouette bag is once again one of Mulberry's best sellers”.
For the 50th anniversary, February 2021 saw Mulberry launch the Icon Editions collection, a hand-picked offering of its “most era-defining silhouettes — recreated in miniature sizes”. Global influencer seeding and more content collaborations helped it make a big impact.
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