Mulberry's profits fall as it eyes the US and Asia for growth
In the year to 31 March 2013, Mulberry’s pre-tax profits fell from £36 million to £26 million after investment in its directly operated international stores and a contraction in gross margin. Total revenue slipped to £165.1 million from £168.5 million in the previous year.
While retail revenue rose 8% to £107.2 million with like-for- like sales growth of 6%, wholesale revenue dropped 16% to £57.9 million reflecting European account rationalisation and destocking by the company’s partners in Asia following a slowdown in demand in the region.
In the UK, retail sales rose by 6% to £91.8 million despite a reduction in tourist spending in the company’s London stores. International retail sales increased by 20% to £15.4 million as the company opened seven new directly operated stores in the USA, Germany and Switzerland.
Online sales climbed by 21% to £17.6 million and accounted for 11% of group sales.
Mulberry chief executive Bruno Guillon said the business was now looking transform itself from a successful UK company to a global brand which would involve raising awareness in the US and Asia. In a statement he said: “After three years of rapid growth, we have had a year of consolidation during which we have laid the foundations for the transition of Mulberry from a UK success story into a global luxury brand. In particular we are increasing UK production and enhancing both our retail experience and product range.
“Mulberry has a well-established business in the UK and a growing presence in Europe. With over 80% of our sales derived from these markets where the economic climate remains difficult, Mulberry’s challenge for the future is to accelerate our brand awareness in the USA and Asia. Greater visibility in Asia will allow us to benefit from tourist traffic in Europe and the USA at the same time as growing our business locally.”
Guillon added that the outlook for both Mulberry's retail and wholesale businesses for the year to 31 March 2014 “remained challenging” due to the difficulty economic conditions in the company’s key markets of the UK and Europe.
Since the end of the financial year, Mulberry said that like-for-like sales have grown by 9% in the 10 weeks to 8 June with like-for- like sales growth of 6%.
Shares in Mulberry fell earlier this week after the company confirmed that its highly regarded creative director Emma Hill is to leave the business after more than five years as its lead designer.
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