LONDON – Green shoots have begun to sprout at Mulberry.
The British accessories brand said Wednesday that improved margins due to fewer markdowns, and strong sales in Asia and on Mulberry’s digital platforms, mean the group will “outperform expectations” and report a small underlying profit before tax for fiscal 2021.
The year ended on March 27, and results will be reported on July 22.
Last November, Mulberry had said that revenue for fiscal 2021 would be lower than the previous year, but that losses would be reduced.
It had not anticipated a profit, but like other luxury accessories brands, it saw a pickup in Asia, which lifted COVID-19 restrictions earlier than Western countries.
Over the last 12 months, Mulberry had also pumped up its digital platforms and streamlined the business to focus on accessories only, and leaving footwear and rtw behind.
As reported, last year it slashed operating expenses by 34 percent via a raft of cost-saving measures, including a “significant” reduction in discretionary costs, pay and recruitment freezes, and a temporary 20 percent pay cut for directors.
It also reduced employee numbers by approximately 25 percent across the group, renegotiated or terminated leases, and did not renew its footwear and ready-to-wear licenses. The store network now comprises 111 retail and franchise stores, a net reduction of eight stores since the start of period.
In the first half, Mulberry said that group revenue fell 29 percent to 48.9 pounds, reflecting the impact of the pandemic and the closure of the majority of stores during lockdown earlier in the year.
After-tax losses shrank to 2 million pounds, compared with nearly 9 million pounds in the corresponding period last year. Operating loss in the six months was 202,000 pounds compared with 7.8 million pounds last year.
Double-digital sales gains in Asia, in particular China and Korea, and in the digital channel had helped take the sting out of Mulberry’s performance in the six months ended Sept. 26, with those positive trends continuing into the second half.
It certainly was a lively first half. As Mulberry was dealing with the impact of COVID-19 and shrinking sales, Mike Ashley’s Frasers Group emerged as a potential bidder for 100 percent of the company. Having hiked its stake to 37 percent, it was forced to make a full-blown offer for the company – but eventually walked away.
Mulberry is majority-owned by the Singaporean billionaire Christina Ong, who has a 56 percent stake.