TIDMMUL
RNS Number : 1322V
Mulberry Group PLC
30 November 2023
Mulberry Group plc
Results for the twenty-six weeks ended 30 September 2023
Investments will power future growth
Mulberry Group plc (the "Group" or "Mulberry"), the British
sustainable luxury brand, announces unaudited results for the
twenty-six weeks ended 30 September 2023 (the "period").
THIERRY ANDRETTA, CHIEF EXECUTIVE OFFICER, COMMENTED:
"Against a challenging macro-economic backdrop, which is
impacting the entire luxury landscape, we have continued to invest
in our long-term future.
"Our strategy to transform our international businesses to a
direct-to-consumer model has enabled us to control the entire
customer experience in Sweden, Australia, New Zealand and Japan.
Our investments in the period in our digital systems, stores and
product will power future growth.
"As one of the most iconic British luxury brands, product
innovation remains at the heart of Mulberry. Our recent product
launches, the Islington, Pimlico and Lana have been well received
by customers, which is testament to our heritage, fresh designs and
modern craftsmanship.
"Looking ahead, we are well placed to capitalise on the
important festive trading period and expect the usual second half
weighting to trading.
"There is no doubt, however, that the macro-economic environment
has deteriorated, and this has had a knock-on effect on consumer
sentiment. At Mulberry we have ensured that we are prepared to
navigate this tricky environment, and we are confident in our
ability to continue to execute our strategy. I continue to believe
that offering VAT-free shopping in the UK would be one of the most
effective ways to encourage business growth in this country. The
fact this has not been reinstated is creating challenges for all
sectors; impacting not only the luxury players, but also
hospitality, travel and tourism. As we look ahead to the New Year,
I urge policy makers to collaborate with all industries campaigning
on this issue and reconsider implementing this to support
businesses across the UK."
Financial Highlights
-- Group revenue up 7% (8% CER(1) ) to GBP69.7m (2022: GBP64.9m)
o UK retail sales although impacted by the broader economic
environment, increased 6% to GBP36.2m (2022: GBP34.1m)
o International retail sales increased 34% (35% CER) to GBP23.5m
(2022: GBP17.5m), supported by our strategy to bring in-house
ownership of overseas stores including Sweden and Australia
o Revenue in the US increased by 38% (42% CER) due to increased
brand awareness
o Asia Pacific retail sales (including the first full period of
ownership of our Australian stores) increased by 13% (18% CER) to
GBP13.5m (2022: GBP11.9m). Underlying retail sales decreased by 7%
(3% CER) due to the challenging China macro-economic climate and
reduced footfall across the region
-- Gross margin of 69% (2022: 71%) was slightly below the prior period
-- Underlying loss before tax of GBP12.3m (2022: underlying loss
before tax GBP2.8m)(2) included GBP3.3m (2022: GBP0.8m) of Software
as a Service (SaaS) costs, the additional operational costs of our
new stores in Sweden and Australia, and additional important
investments for future growth in the Group
-- Reported loss before tax of GBP12.8m (2022: loss before tax GBP3.8m)
Operating Highlights
-- Digital sales represented 29% of total Group revenue in the
period (2022: 25%), demonstrating the continuing trend towards
omni-channel shopping in all regions
-- Our collaborations with Paul Smith, Axel Arigato and Stefan
Cooke drove further global awareness of the Mulberry brand
-- New stores opened in Italy, China and South Korea
-- Product innovation continued in the period with the launch of
new bag families including the Islington and the Retwist
-- Ongoing investment in projects to update the Group's legacy
systems and build on our omni-channel capabilities
Sustainability Highlights
-- Continued focus on embedding sustainability and circularity across the entire business
-- Mulberry Pre-Loved, our buy back and resale programme,
generated sales above the same period last year
-- 100% of leather (including all suede and nappa linings) for
Bags, Mini Bags and Small Leather Goods is sourced from tanneries
with an environmental accreditation. We continue to offset the
carbon emissions related to leather purchases
-- Lifetime Service Centre at The Rookery continues to restore more than 10,000 bags a year
Current Trading
-- The wider macro-economic environment and geo-political
climate continues to present some uncertainty, but we are well
positioned to navigate this given our beautifully crafted product,
made in our Somerset factories and sold at the best value price
point in the luxury market
-- Mulberry has a clear customer proposition and plan for growth
and we remain confident in our ability to navigate this uncertainty
and execute this strategy for the benefit of all our
stakeholders
-- Since period end, we launched two new bag families globally,
the Lana and the Pimlico which are performing well
-- Well prepared for the second half of the financial year,
which is weighted in trading given the important festive trading
period and further emphasised by our move from wholesale to
retail
FOR FURTHER DETAILS PLEASE CONTACT:
Mulberry
Charles Anderson Tel: +44 (0) 20 7605 6793
Headland (Public Relations)
Lucy Legh / Joanna clark Tel: +44 (0) 20 3805 4822
mulberry@headlandconsultancy.com
HOULIHAN LOKEY UK LIMITED (FINANCIAL ADVISER AND NOMAD)
Tim Richardson Tel: +44 (0) 20 7484 4040
Notes
1 Constant Exchange Rates
2 See note 2 for more details of alternative performance
measures and one off costs
OVERVIEW
Despite the current uncertain global economic climate, which
continues to dampen consumer confidence, Mulberry continues to
invest in its long-term future. Our strategic goals are clearly set
out in our strategic pillars - omni-channel distribution,
international development, constant innovation and sustainable
lifecycle - and will make us more efficient, more customer focused
and enable growth. Over the six months to 30 September 2023, we
made good progress towards all of them.
We invested in new lines, collaborations and extended ranges.
For example, collaborations with Swedish lifestyle label Axel
Arigato in April and Stefan Cooke in September introduced us to a
new generation of customers; and working with UK heritage brand
Paul Smith drove new customer sales. Further innovation came with
new bag ranges - the Islington and the Retwist. With two more
launched since period end - the Pimlico and the Lana.
Pop ups continue to allow us efficiently to reach new audiences,
with Leccio giving us invaluable insights into the Italian
market.
International sales represented 39% of total retail revenues,
supported by our strategy to bring in-house ownership of overseas
stores. This is the first full six-month period during which our
stores in Sweden and Australia have been fully owned; our stores in
New Zealand and Japan have been fully owned since June 2023. We
experienced strong growth in retail sales in the United States, up
38% (42% CER) as we continued to build brand awareness in this
market. In Asia Pacific overall retail sales increased by 13% (18%
CER) to GBP13.5m (2022: GBP11.9m), this period includes six months
of our newly acquired stores in Australia. Underlying retail sales
in Asia Pacific decreased by 7% principally due to the challenging
macro-economic climate in China and reduced footfall across the
region. We continue to develop our lifestyle range for the second
half of the financial year and expect lifestyle sales to continue
to grow throughout the remainder of the financial year.
Central to Mulberry's business model is sustainability and
circularity. Projects incorporating and promoting pre-loved
performed well, and we have made progress in lowering further our
already below-industry-average carbon footprint through our
hyper-local, hyper-transparent farm-to-finished-product model. We
expect validation of our science-based greenhouse gas emissions
reduction targets by the end of this financial year.
Group revenue increased by 7% (9% CER) over the period, with a
slight decline in the gross margin to 69% (2022: 71%). An
underlying loss before tax for the period of GBP12.3m (2022: loss
before tax of GBP2.8m) reflects the additional investments and
costs to support business growth, including SaaS costs and the
additional operational costs of our stores in Sweden and Australia.
We ended the period with net borrowings of GBP13.6m(1) (2022: net
borrowings GBP0.5m).
Much of this progress is thanks to the hard work and commitment
of our many colleagues around the world and I recognise and thank
them for their enduring efforts.
BOARD CHANGES
Appointment of additional Independent Non-Executive Director
On 7 September 2023, the Group appointed Ms Leslie Serrero as an
additional Independent Non-Executive Director. Ms Serrero will also
sit on the Audit Committee of the Board.
Ms Serrero has extensive experience of luxury brand leadership.
She has been International Managing Director of US luxury group
Casa Komos Brands Group since October 2022, having previously held
senior executive roles at Fendi France (2019-2022), Christian Dior
Couture (2012-2019) and Lacoste SA (2009-2012). Prior to this, Ms
Serrero was a project leader at Boston Consulting Group for six
years, advising companies in the retail, consumer and fashion
sectors on transformation and growth strategies.
CURRENT TRADING AND OUTLOOK
Since the period end, we have launched two new bag families
globally, the Lana and the Pimlico, which have both performed
well.
The wider macro-economic environment, including inflationary
pressures, continues to present some uncertainty, but we are well
positioned as the best value price point in the luxury market and
prepared for the second half of the financial year, which is
weighted in trading given the important festive trading period and
further emphasised by our move from wholesale to retail.
Mulberry has a clear customer proposition and plan for growth
and we remain confident in our ability to navigate this uncertainty
and execute this strategy for the benefit of all our
stakeholders.
Notes
1 Net borrowings comprises cash balances of GBP5.9m (2022:
GBP6.5m) less bank borrowings of GBP19.5m (2022: GBP7.0m), which
excludes related parties and non-controlling interest of GBP4.5m
(2022: GBP5.6m)
PROGRESS AGAINST OUR STRATEGY
With a rich heritage in leather craftmanship and a reputation
for innovation, we aim to build Mulberry as the British sustainable
global luxury brand through four strategic growth pillars.
Strategic pillar 1 - Omni-channel distribution
The period saw us invest in our ongoing digital transformation
to enhance our omni-channel distribution. Our new omni-hubs in
Glasgow, Bath and London's Regent Street take the majority of
omni-orders. They also optimise store space and are already making
order management more efficient. The payback is clear: digital
sales as a proportion of the Group revenue continued to rise - up
4% to 29% in the period. We launched the Mulberry Mindset strategy
in June to help staff provide memorable interactions for customers
and build authentic relationships.
Refurbishments and pop ups in London, Europe and Asia also
rewarded investment, helping us reach new audiences and lift
sales.
Strategic pillar 2 - International development
We continued to optimise our digital channels and global store
network, focusing on the US and Asia Pacific with their strong
growth opportunities, bringing more stores and concessions in-house
to better control pricing and distribution.
In the US, increasing brand awareness, helped to drive sales up
38% (42% CER). Asia Pacific retail sales, including the first full
period of ownership of our Australian stores, increased by 13% (18%
CER). Underlying retail sales decreased by 7% (3% CER) due to the
challenging China macro-economic climate and reduced footfall
across the region. Of note was our Chinese Valentine's Day event at
newly opened Nanjing Deji store with actress Zhu Zhu. This boosted
sales and brand awareness, with the Bayswater bag performing
particularly well.
In addition to Australia, the period saw the first full
six-month contribution of stores and concessions in Sweden; the New
Zealand store and stores and concessions in Japan became wholly
owned in May and June respectively.
In Europe, our six-month pop up in the luxury outlet Mall
Firenze, Leccio, is giving us valuable insight into the Italian
market and performing well.
Strategic pillar 3 - Constant innovation
Mulberry has a long tradition of innovation and collaboration as
it adapts to changing customer tastes and reaching new markets.
Further innovation came from new bag ranges - the Islington and the
Retwist - as well as new silhouettes for the Bayswater, Mini Lily
and North South Tote. Stand out performances came from Bayswater
Powder Rose and Pale Grey. With the Pimlico and the Lana ranges
launched since the period end, we expect bag sales to make up 79%
of our total by the end of the current financial year.
Collaborations in the period included Swedish minimalist Axel
Arigato, the heritage British designer Paul Smith and the
award-winning Stefan Cooke. The Stefan Cooke collaboration included
a pop-up during September's London Fashion Week and along with the
April Axel Arigato collaboration, successfully drove greater
awareness of Mulberry among younger generations. The Paul Smith
collaboration also introduced us to new customers. All led to
increased sales.
While bags and leather goods remain Mulberry's mainstay, we
continue to explore opportunities in lifestyle categories. During
the period we launched our lifestyle range and made further
investments to extend this range in the second half of the
year.
Strategic pillar 4 - Sustainable lifecycle
Our Made to Last manifesto with its Lifetime Service Centre and
the Mulberry Exchange for pre-loved bags set us apart and are
central in our strategy to be regenerative and circular across our
entire supply chain by 2030. This strategy feeds into everything we
do.
In April, our collaboration with Axel Arigato highlighted our
wear-forever ethos while in September, our capsule collaboration
with Stefan Cooke, focusing on pre-loved, was heralded by Vogue as
"a strong case for the coolest bag collaboration of the year". Both
brilliantly showcased our Mulberry Exchange platform, which ensures
every Mulberry bag can have multiple lives. The Stefan Cooke
collaboration contributed to the best-ever week for pre-loved on
Mulberry.com. We saw significant growth on the previous financial
year.
We remain carbon neutral across our UK operations and source
100% of our leather from environmentally accredited tanneries.
Ongoing efforts to establish a hyper-local, hyper-transparent
farm-to-finished-product model are further reducing our already
lower-than-industry average carbon footprint. Meanwhile, we offset
carbon emissions related to our leather purchases and business
flights and we expect validation of our science-based greenhouse
gas reduction targets by the end of this financial year.
Sustainable materials continue to play an important role in our
drive for Net Zero and this extends to our paper and packaging.
Since 2020, more than 3.2 million coffee cups have been turned into
Mulberry Green paper packaging and since 2011 all our cardboard and
paper are Forest Stewardship Council certified.
Respect for people as well as the planet is embedded in all we
do and we are proud to be a certified Living Wage employer and our
hybrid working policy helps cut emissions and costs associated with
commuting.
During the period we launched our Diversity, Equity and
Inclusion (DE&I) committee to drive progress across all
DE&I topics. To date, this includes partnering with Mentoring
Matters, Flourish in Diversity and The Outsiders Perspective.
In recognition of all our efforts, in May, we won Brand of the
Year at the Drapers Sustainable Fashion Awards, with the judges
citing our Made to Last Manifesto, our thriving apprenticeship
programme and our longstanding commitment to British
manufacturing.
FINANCIAL REVIEW
Group revenue and gross profit
Revenue analysis for the 26 weeks to 30 September 2023 compared
to the same period last year is as follows:
2023 2022
GBP'm GBP'm % change
Digital 20.3 16.3 +25%
Stores 39.4 35.3 +12%
Retail (omni-channel) 59.7 51.6 +16%
------ ------ ---------
Franchise and Wholesale 10.0 13.3 -25%
------ ------ ---------
Group Revenue 69.7 64.9 +7%
------ ------ ---------
Digital 12.8 10.8 +19%
Stores 23.4 23.3 0%
Omni-channel - UK 36.2 34.1 +6%
------ ------ ---------
Digital 2.9 2.7 +7%
Stores 10.6 9.2 +15%
Omni-channel - Asia
Pacific 13.5 11.9 +13%
------ ------ ---------
Digital 4.6 2.8 +64%
Stores 5.4 2.8 +93%
Omni-channel - Rest
of World 10.0 5.6 +79%
------ ------ ---------
Retail (omni-channel) 59.7 51.6 +16%
------ ------ ---------
Q1 Q2 H1 2023
Revenue % change Revenue % change Revenue % change
GBP'm GBP'm GBP'm
Digital 10.1 +19% 10.2 +31% 20.3 +25%
Stores 20.1 +15% 19.3 +8% 39.4 +12%
-------- --------- -------- --------- -------- ---------
Retail (omni-channel) 30.2 +16% 29.5 +15% 59.7 +16%
-------- --------- -------- --------- -------- ---------
Franchise and
Wholesale 7.0 -18% 3.0 -38% 10.0 -25%
-------- --------- -------- --------- -------- ---------
Group revenue 37.2 +8% 32.5 +7% 69.7 +7%
-------- --------- -------- --------- -------- ---------
Group revenue increased by 7% (8% CER) in the period, with
growth in both Q1 (+8%) and Q2 (+7%) on the prior period. Retail
omni-channel sales grew +16% in the period driven by our strategy
to transition some wholesale partners to full ownership or
concession agreements. UK total retail sales increased by 6%. Full
price sales in the UK increased by 4% to GBP27.9m (2022: GBP26.8m)
with the full price mix reducing slightly to 77% (2022: 79%). UK
store sales remained in line with prior period, however UK digital
sales were up 19% on the prior period, with average transaction
value increasing by 9% compared to the prior period and represented
35% of total UK retail sales (2022: 32%).
Asia Pacific retail revenue increased 13% (18% CER), which
includes the first full six-month period from the Australia retail
stores which were acquired in the second half of last year.
Excluding Australia, Asia Pacific retail revenue would have been
down 7% due to the challenging China macro-economic climate and
reduced footfall across all the markets.
Rest of World retail revenue, which includes Europe and the US,
increased 79% (73% CER) with GBP1.7m relating to the business in
Sweden which was acquired in September 2022. Revenue in the US also
increased by 38% (42% CER) due to increased brand awareness in the
market.
Franchise and wholesale sales decreased by 25%, with wholesale
arrangements in Sweden and Australia converted to retail following
the purchase of the business in the prior year.
Other operating expenses
Other operating expenses increased by 21% to GBP58.9m (2022:
GBP48.6m) and underlying operating expenses increased by 9%. A
breakdown is given below:
2023 2022
GBP'm GBP'm % change
Underlying operating
expenses 51.6 47.2 +9%
SaaS Costs 3.3 0.8 +313%
Store Closure Charge/(Credit) 0.5 (0.2) -350%
New initiatives - Sweden
& Australia 3.5 0.8 +338%
------ ------ ---------
Operating expenses 58.9 48.6 +21%
------ ------ ---------
The underlying operating cost increase has been driven by
inflationary and real-living wage pay increases and we also
increased technology spend to GBP4.2m (2022: GBP3.3m) to support
the underlying costs associated with projects and systems
investments.
In light of the March 2021 IFRIC agenda decision to clarify the
treatment of Software as a Service (SaaS) costs, during the period
we expensed GBP3.3m (2022: GBP0.8m) of SaaS costs which would
previously have been capitalised, in line with the accounting for
configuration and customisation cost arrangements. We expect to
incur further SaaS costs in the second half.
The acquisition of our stores in Sweden and Australia have
increased costs during the period by GBP2.7m. The full year impact
of these new initiatives will be included in the current
period.
Loss before tax
The Group's underlying loss before tax was GBP12.3m (2022:
underlying loss before tax of GBP 2.8 m), included GBP3.3m (2022:
GBP0.8m) of SaaS costs and the additional operational costs of our
new stores in Sweden and Australia.
Reported loss before tax for the period was GBP12.8m (2022: loss
before tax of GBP3.8m) and includes a store closure charge of
GBP0.5m (2022: credit of GBP0.2m). The prior period included
GBP1.2m acquisition costs relating to the business in Australia and
Sweden.
2023 2022
GBP'm GBP'm
Underlying loss before
tax pre-SaaS costs (9.0) (2.0)
SaaS Costs (3.3) (0.8)
------- ------
Underlying loss before
tax (12.3) (2.8)
------- ------
Store Closure (Charge)/Credit (0.5) 0.2
Australia and Sweden acquisition
costs - (1.2)
------- ------
Reported loss before tax (12.8) (3.8)
------- ------
See note 2 below for further details of Alternative Performance
Measures.
Taxation
The Group reported a tax charge for the period of GBP0.6m (2022:
GBP0.3m.) The tax charge in the period is made up of GBP0.4m for
deferred tax, which is calculated by applying the forecast full
year effective tax rate to the Group results and GBP0.2m relating
to prior and current period current tax charges.
Balance Sheet
Net working capital, which comprises inventories, trade and
other receivables and trade and other payables decreased by GBP9.1m
to GBP34.6m at the period end (2022: GBP43.7m). This decrease was
driven by a reduction in inventories of GBP3.4m, as a result of
optimisation of inventory levels. We are managing stock levels in
light of the ongoing macro-economic uncertainty and cost
increases.
At the period end, other trade receivables had decreased by
GBP2.7m, principally due to wholesale customers being converted to
direct-to-customer models. The increase in other trade payables of
GBP3.0m is due to the timing of payments at the period end date and
recognising a liability for contributions towards the new lessee
rentals for the re-assigned Bond Street store.
Lease liabilities (current and non-current) reduced by GBP7.2m
to GBP53.0m (2022: GBP60.2m) due to the release of the lease
liability relating to the Bond Street store, which was re-assigned
at the beginning of the period and regular lease payments made in
the period.
Cash flow
The net decrease in cash and cash equivalents of GBP0.9m (2022:
decrease of GBP19.5m) included a GBP6.0m draw down of the Group's
revolving credit facility (RCF). Operating cash outflow for the
period was GBP3.9m (2022: GBP15.6m) driven by increased operating
expenses but partially offset by the improvement in working
capital.
During the period we continued to invest in capital expenditure
of GBP5.3m (2022: GBP5.2m) of which GBP2.9m (2022: GBP2.0m) related
to transformation projects and IT systems to support growth.
GBP0.8m (2022: GBP3.2m) has been spent in the period on new and
existing retail stores.
Borrowing facilities
The Group had bank borrowings relating to drawdowns under its
RCF of GBP13.0m at 30 September 2023 (2022: GBP7.0m). The
borrowings shown in the balance sheet also include loans from
minority shareholders in the Chinese and Japanese subsidiaries of
GBP4.5m (2022: GBP5.6m) and an overdraft of GBP6.5m (2022:
GBPnil).
The Group's net cash balance (cash and cash equivalents
including overdrafts) at 30 September 2023 was -GBP0.6m (2022:
GBP6.5m).
During the period the Group extended its secured RCF with HSBC
until September 2027, with unchanged banking covenants. The
covenants are tested quarterly on a "frozen GAAP" basis (excluding
the impact of IFRS 16 and SaaS costs) and contain a 12-month
rolling EBITDA target ratio and a maximum net debt target.
In addition, the Group has a GBP4.0m multi-currency overdraft
facility which is renewed annually.
Significant transactions in the period
Bond Street lease reassignment
On 3 April 2023 the Group assigned the lease on its Bond Street
store which closed in February 2023 and as a result disposed of the
right-of-use asset and released the remaining lease liabilities.
Additionally, the Group has incurred a charge for both the
contribution towards lease rentals of the new lessee and for a
financial guarantee covering the remaining period of the lease. The
net charge of GBP517,000 is included in the Income Statement (see
note 2).
Investment in Mulberry Japan Co. Limited
On 27 June 2023 the Group, via its subsidiary Mulberry Trading
Holding Company Limited acquired the 50% share capital owned by its
Joint Venture partner Onward Holding Co Limited, in Mulberry Japan
Co. Limited for 1 Yen. Following the acquisition, the Group now
owns 100% of Mulberry Japan Co. Limited (see note 7).
CONSOLIDATED INCOME STATEMENT
26 WEEKSED 30 SEPTEMBER 2023
Note
Unaudited Unaudited Audited
26 weeks ended 26 weeks ended 52 weeks ended
30 September 2023 GBP'000 1 October 2022 1 April 2023
GBP'000 GBP'000
Revenue 69,743 64,920 159,129
Cost of sales (21,694) (18,954) (45,879)
Gross profit 48,049 45,966 113,250
Impairment charge relating to intangibles - - (2,366)
Impairment credit relating to property,
plant and equipment - - 850
Impairment credit relating to right-of-use
assets - - 12,949
Other operating expenses (58,884) (48,599) (108,485)
Other operating income 390 416 776
Operating (loss)/profit (10,445) (2,217) 16,974
Share of results of associates 19 36 52
Finance income 1 5 11
Finance expense (2,334) (1,574) (3,887)
(Loss)/profit before tax (12,759) (3,750) 13,150
Tax charge 4 (639) (279) (1,753)
(Loss)/profit for the period (13,398) (4,029) 11,397
Attributable to:
Equity holders of the parent (12,279) (2,715) 13,243
Non-controlling interests (1,119) (1,314) (1,846)
(Loss)/profit for the period (13,398) (4,029) 11,397
Basic (loss)/profit per share 5 (22.5p) (6.8p) 19.1p
Diluted (loss)/profit per share 5 (22.5p) (6.8p) 19.1p
All activities arise from continuing operations.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
26 WEEKSED 30 SEPTEMBER 2023
Unaudited Unaudited Audited
26 weeks ended 26 weeks ended 52 weeks ended
30 September 2023 GBP'000 1 October 2022 1 April 2023
GBP'000 GBP'000
(Loss)/profit for the period (13,398) (4,029) 11,397
Items that may be reclassified subsequently to
profit or loss;
Exchange differences on translation of foreign
operations (845) 408 (483)
Total comprehensive (expense)/income for the
period (14,243) (3,621) 10,914
Attributable to:
Equity holders of the parent (13,166) (1,882) 12,888
Non-controlling interests (1,077) (1,739) (1,974)
Total comprehensive (expense)/income for the
period (14,243) (3,621) 10,914
CONSOLIDATED BALANCE SHEET
AT 30 SEPTEMBER 2023
Unaudited Unaudited Audited
30 September 2023 GBP'000 1 October 2022 1 April 2023
GBP'000 GBP'000
Non-current assets
Intangible assets 7,832 6,390 6,015
Property, plant and equipment 20,274 16,765 19,817
Right-of-use assets 43,649 30,453 57,520
Interests in associates 168 375 254
Deferred tax asset 212 1,871 622
72,135 55,854 84,228
Current assets
Inventories 45,320 48,726 48,250
Trade and other receivables 15,266 17,984 19,901
Current tax asset - 409 -
Cash and cash equivalents 5,852 6,544 6,872
66,438 73,663 75,023
Total assets 138,573 129,517 159,251
Current liabilities
Trade and other payables (25,971) (22,962) (28,143)
Current tax liabilities (331) - (182)
Lease liabilities (9,971) (11,199) (10,932)
Borrowings (23,883) (3,798) (11,562)
(60,156) (37,959) (50,819)
Net current assets 6,282 35,704 24,204
Non-current liabilities
Trade and other payables (2,191) - -
Lease liabilities (43,043) (49,021) (61,666)
Borrowings - (8,814) -
(45,234) (57,835) (61,666)
Total liabilities (105,390) (95,794) (112,485)
Net assets 33,183 33,723 46,766
Equity
Share capital 3,004 3,004 3,004
Share premium account 12,160 12,160 12,160
Own share reserve (854) (923) (896)
Capital redemption reserve 154 154 154
Foreign exchange reserve (170) 1,566 675
Retained earnings 25,176 23,968 38,110
Equity attributable to holders of the parent 39,470 39,929 53,207
Non-controlling interests (6,287) (6,206) (6,441)
Total equity 33,183 33,723 46,766
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
26 WEEKSED 30 SEPTEMBER 2023
Share Own Capital Foreign Non-controlling
Share premium share re-demption exchange Retained Total interest
capital account reserve reserve reserve earnings GBP'000 GBP'000 Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 equity
GBP'000
As at 2 April 2022 3,004 12,160 (1,269) 154 1,158 27,006 42,213 (4,467) 37,746
Loss for the period - - - - - (2,715) (2,715) (1,314) (4,029)
Other comprehensive
income for the
period - - - - 408 - 408 - 408
Total comprehensive
income/(expense) for
the period - - - - 408 (2,715) (2,307) (1,314) (3,621)
Charge for employee
share-based payments - - - - - 23 23 - 23
Own shares - - 346 - - - 346 - 346
Exercise of share
options - - - - - (346) (346) - (346)
Non-controlling
interest foreign
exchange - - - - - - - (425) (425)
As at 1 October 2022 3,004 12,160 (923) 154 1,566 23,968 39,929 (6,206) 33,723
Profit/(loss) for the
period - - - - - 15,958 15,958 (532) 15,426
Other comprehensive
expense for the
period - - - - (891) - (891) - (891)
Total comprehensive
(expense)/income for
the period - - - - (891) 15,958 15,067 (532) 14,535
Impairment of shares
in trust - - 27 - - (27) - - -
Dividends paid - - - - - (1,789) (1,789) - (1,789)
Non-controlling
interest foreign
exchange - - - - - - - 297 297
As at 1 April 2023 3,004 12,160 (896) 154 675 38,110 53,207 (6,441) 46,766
Loss for the period - - - - - (12,279) (12,279) (1,119) (13,398)
Other comprehensive
expense for the
period - - - - (845) - (845) - (845)
Total comprehensive
expense for the
period - - - - (845) (12,279) (13,124) (1,119) (14,243)
Charge for employee
share-based payments - - - - - 7 7 - 7
Impairment of shares
in trust - - 42 - - (42) - - -
Adjustment arising
from investment by
non-controlling
interests (see note
7) - - - - - - - 611 611
Adjustment arising
from acquisition of
non-controlling
interests (see note
7) - - - - - (620) (620) 620 -
Non-controlling
interest foreign
exchange - - - - - - - 42 42
As at 30 September
2023 3,004 12,160 (854) 154 (170) 25,176 39,470 (6,287) 33,183
CONSOLIDATED CASH FLOW STATEMENT
26 WEEKSED 30 SEPTEMBER 2023
Unaudited Unaudited Audited
26 weeks ended 26 weeks ended 52 weeks ended
30 September 2023 GBP'000 1 October 2022 1 April 2023
GBP'000 GBP'000
Operating (loss)/profit for the period (10,445) (2,217) 16,974
Adjustments for:
Depreciation and impairment of property, plant
and equipment 2,451 1,922 3,487
Depreciation and impairment of right-of-use
assets 4,517 3,577 (5,021)
Amortisation and impairment of intangible assets 921 835 4,041
Gain on lease modifications and lease disposals (5,484) (243) (441)
(Profit)/loss on sale of property, plant and
equipment - (2) 96
Business combination gain - - (304)
Share-based payments expense 7 23 23
Operating cash (outflows)/inflows before
movements in working capital (8,033) 3,895 18,855
Decrease/(increase) in inventories 3,063 (11,960) (9,722)
Decrease/(increase) in receivables 4,673 (2,057) (3,974)
(Decrease)/increase in payables (1,229) (1,073) 2,001
Cash (used)/generated by operations (1,526) (11,195) 7,160
Income taxes paid (71) (2,790) (2,427)
Interest paid (2,334) (1,582) (3,899)
Net cash(outflow)/inflow from operating
activities (3,931) (15,567) 834
Investing activities:
Interest received 1 5 15
Acquisition of businesses (see note 8) (238) - (3,182)
Purchases of property, plant and equipment (3,057) (4,030) (7,129)
Proceeds from disposal of property, plant and
equipment - 2 2
Acquisition of intangible fixed assets (2,219) (1,179) (3,919)
Dividend received from associate - - 40
Net cash used in investing activities (5,513) (5,202) (14,173)
Financing activities:
(Repayment)/increase in loans from
non-controlling interests (744) 94 246
Investment from non-controlling interest (see 611 - -
note 7)
New borrowings 13,309 7,000 6,100
Dividends paid - - (1,789)
Principal elements of lease payments (4,629) (5,840) (10,261)
Net cash generated/(used) in financing activities 8,547 1,254 (5,704)
Net decrease in cash and cash equivalents (897) (19,515) (19,043)
Cash and cash equivalents at beginning of period 6,872 25,669 25,669
Effect of foreign exchange rate changes (123) 390 246
Cash and cash equivalents at end of period 5,852 6,544 6,872
Notes to the condensed financiAL statements
26 WEEKSED 30 SEPTEMBER 2023
1. GENERAL INFORMATION
Mulberry Group plc is a company incorporated in the United
Kingdom under the Companies Act 2006. The half year results and
condensed consolidated financial statements for the 26 weeks ended
30 September 2023 (the interim financial statements) comprise the
results for the Company and its subsidiaries (together referred to
as the Group) and the Group's interest in associates. The interim
financial statements for the 26 weeks ended 30 September 2023 have
not been reviewed or audited.
The information for the 52 weeks ended 1 April 2023 does not
constitute statutory accounts as defined in section 434 of the
Companies Act 2006. The statutory accounts for that period were
approved by the Board of Directors on 27 June 2023 and have been
filed with the Registrar of Companies. The auditor's report on
those statutory accounts was not qualified, did not include a
reference to any matters to which the Auditor drew attention by way
of emphasis without qualifying the report and did not contain
statements under section 498(2) (3) of the Companies Act 2006.
2. ACCOUNTING POLICIES AND BASIS OF PREPARATION
The accounting policies and methods of computation followed in
the interim financial statements are consistent with those
published in the Group's Annual Report and Financial Statements for
the 52 weeks ended 1 April 2023.
These condensed consolidated interim financial statements for
the 26 weeks ended 30 September 2023 have been prepared in
accordance with IAS 34 'Interim Financial Reporting' as adopted by
the European Union. This report should be read in conjunction with
the Group's financial statements for the 52 weeks ended 1 April
2023, which have been prepared in accordance with UK-adopted
International Financial Reporting Standards in conformity with the
requirements of the Companies Act 2006.
The Annual Report and Financial Statements are available from
the Group's website (www.mulberry.com) or from the Company
Secretary at the Company's registered office, The Rookery,
Chilcompton, Bath, England, BA3 4EH.
CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION
UNCERTAINTY
Preparation of the condensed consolidated interim financial
statements requires the Directors to make certain estimates and
judgements that affect the measurement of reported revenues,
expenses, assets and liabilities.
The critical accounting judgements and key sources of estimation
uncertainty applied in the preparation of the condensed
consolidated interim financial statements are consistent with those
described on pages 91-92 of the Group's Annual Report and Financial
Statements for the 52 weeks ended 1 April 2023.
PRINCIPAL RISKS AND UNCERTAINTIES
The management of the business and the execution of the Group's
growth strategies are subject to a number of risks and
uncertainties that could adversely affect the Group's future
development. The principal risks and uncertainties for the Group
and the key mitigating actions used to address them are consistent
with those outlined on pages 42-47 of the Group's Annual Report and
Financial Statements for the 52 weeks ended 1 April 2023.
ALTERNATIVE PERFORMANCE MEASURES
In reporting financial information, the Group presents an APMs,
which is not defined or specified under the requirements of IFRS.
The Group believes that these APMs, which are not considered to be
a substitute for, or superior to, IFRS measures, provide
stakeholders with additional helpful information on the performance
of the business. These APMs are consistent with how the business
performance is planned and reported within the internal management
reporting to the Board of Directors. Some of these measures are
also used for the purpose of setting remuneration targets.
The Group makes certain adjustments to the statutory profit or
loss measures in order to derive the APMs. Adjusting items are
those items which, in the opinion of the Directors, should be
excluded in order to provide a consistent and comparable view of
the performance of the Group's ongoing business. Generally, this
will include those items that are largely one-off and material in
nature as well as income or expenses relating to acquisitions or
disposals of businesses or other transactions of a similar nature.
Treatment as an adjusting item provides stakeholders with
additional useful information to assess the year-on-year trading
performance of the Group.
A reconciliation of reported (loss)/profit before tax to
underlying (loss)/profit before tax is set out below:
Unaudited Unaudited Audited
26 weeks ended 26 weeks ended 52 weeks ended
30 September 2023 GBP'000 1 October 2022 1 April 2023
GBP'000 GBP'000
Reconciliation to underlying (loss)/profit before
tax
(Loss)/profit before tax (12,759) (3,750) 13,150
Store closure charge/(credit) 517 (210) (205)
Impairment credit related to property, plant and
equipment - - (850)
Impairment credit related to right-of-use assets - - (12,949)
Impairment charge for intangible assets - - 2,366
Australia acquisition costs - 933 806
Sweden acquisition costs - 193 193
Underlying (loss)/profit before tax - non-GAAP
measure (12,242) (2,834) 2,511
Underlying basic (loss)/profit per share (21.8p) (5.3p) 5.8p
Underlying diluted (loss)/profit per share (21.8p) (5.3p) 5.8p
Store closure charge
During the period no stores (2022: 2 stores) were closed although the lease on a store that
had been closed in February 2023 was assigned on 3 April 2023. The charge on disposal comprises
the release to the income statement of lease and other liabilities of GBP17,735,000 (2022:
GBP210,000), the write-off of right-of-use assets of GBP11,777,000 (2022: GBPnil), a charge
of lease exit costs of GBP150,000 (2022: GBPnil), a contribution of GBP5,205,000 (2022 : GBPnil)
towards the new lessee rentals and a charge of GBP1,120,000 (2022 : GBPnil) being the financial
guarantee for the remaining lease rentals.
Australian acquisition costs
During the previous period the Group took over the running of five stores in Australia and
incurred a write-off of debtors of GBP933,000.
Sweden acquisition costs
During the previous period the Group took over the running of three stores in Sweden previously
owned by the Swedish franchisee and incurred costs of GBP193,000.
3. GOING CONCERN
In determining whether the Group's accounts can be prepared on a
going concern basis, the Directors considered the Group's business
activities and cash requirements together with factors likely to
affect its performance and financial position. The Group had cash
and cash equivalents (net of overdrafts) of -GBP0.6 million (2022:
GBP6.5 million) at 30 September 2023 and had drawn down GBP13.0
million (2022: GBP7.0 million) on its revolving credit facility.
The Directors have also reviewed the 12-month forecasts including
their resilience in the face of possible downside scenarios.
Based on the assessment outlined above, the Directors have a
reasonable expectation that the Group has access to adequate
resources to enable it to continue to operate as a going concern
for the foreseeable future. For these reasons, the Directors
consider it appropriate for the Group to continue to adopt the
going concern basis of accounting in preparing the Interim Report
and financial statements.
4. TAXATION
The tax charge relates to deferred tax which is calculated by
applying the forecast full year effective tax rate to the interim
(loss)/profit and calculating the deferred tax balance for the
period.
5. EARNINGS PER SHARE ('EPS')
Unaudited Unaudited Audited
26 weeks ended 26 weeks ended 52 weeks ended
30 September 2023 GBP'000 1 October 2022 1 April 2023
GBP'000 GBP'000
Basic (loss)/profit per share (22.5p) (6.8p) 19.1p
Diluted (loss)/profit per share (22.5p) (6.8p) 19.1p
Underlying basic (loss)/profit per share (21.8p) (5.3p) 5.8p
Underlying diluted (loss)/profit per share (21.8p) (5.3p) 5.8p
Earnings per share is calculated based on the following
data:
Unaudited Unaudited Audited
26 weeks ended 26 weeks ended 52 weeks ended
30 September 2023 GBP'000 1 October 2022 1 April 2023
GBP'000 GBP'000
(Loss)/profit for the period for basic and
diluted earnings per share (13,398) (4,029) 11,397
Adjusting items:
Store closure charge/(credit)* 388 (206) (203)
Reversal of impairment charge related to
property, plant and equipment* - - (650)
Reversal of impairment charge related to
right-of-use assets* - - (10,342)
Impairment charge for intangible assets - 2,366
Australia acquisition costs* - 193 728
Sweden acquisition costs - 855 193
Underlying (loss)/profit for the period for basic
and diluted earnings per share (13,010) (3,187) 3,489
*These items are included net of tax
Unaudited Unaudited Audited
26 weeks ended 26 weeks ended 52 weeks ended
30 September 2023 GBP'000 1 October 2022 1 April 2023
GBP'000 GBP'000
Weighted average number of ordinary shares for
the purpose of basic EPS 59.7 59.6 59.6
Effect of dilutive potential ordinary shares: - - -
share options
Weighted average number of ordinary shares for
the purpose of diluted EPS 59.7 59.6 59.6
The weighted average number of ordinary shares in issue during
the period excludes those held by the Employee Share Trust.
6. BUSINESS AND GEOGRAPHICAL SEGMENTS
IFRS 8 requires operating segments to be identified on the basis
of internal reports about components of the Group that are
regularly reviewed by the Chief Operating Decision Maker ("CODM"),
defined as the Board of Directors, to allocate resources to the
segments and to assess their performance. Inter-segment pricing is
determined on an arm's length basis. The Group also presents
analysis by geographical destination and product categories.
a) Business segment
The Group continues to extend its omni-channel network in order
to support the Group's global growth ambitions. Mulberry has thus
become increasingly reliant on individual market-level
profitability metrics to enable them to make timely market-centric
decisions that are operational and investment in nature. It is
therefore appropriate for the segmental analysis disclosures to be
a regional view of segments (being UK, Asia Pacific and Other
International) to reflect the current business operations and the
way the business internally reports and the information that the
CODM reviews and makes strategic decisions based on its financial
results.
The principal activities are as follows:
-- The accounting policies of the reportable segment are the
same as described in the Group's financial statements. Information
regarding the results of the reportable segment is included below.
Performance for the segment is assessed based on operating
profit/(loss).
-- The Group designs, manufactures and manages the Mulberry
brand for the segment and therefore the finance income and expense
are not attributable to the reportable segments.
GROUP INCOME STATEMENT
26 WEEKSED 30 SEPTEMBER 2023
Other International
UK Asia Pacific GBP'000 Eliminations GBP'000 Total
GBP'000 GBP'000 GBP'000
Revenue
Omni-channel 56,616 13,474 10,006 (20,402) 59,694
Wholesale 1,026 2,077 6,946 10,049
Total revenue 57,642 15,551 16,952 (20,402) 69,743
Segment (loss)/profit (6,454) (4,591) 2,395 (8,650)
Central costs (1,278)
Store closure charge (517)
Operating loss (10,445)
Share of results of
associates 19
Finance income 1
Finance expense (2,334)
Loss before tax (12,759)
Other International
UK Asia Pacific GBP'000 Central Total
GBP'000 GBP'000 GBP'000 GBP'000
Segment capital
expenditure 4,572 956 116 - 5,644
Segment depreciation and
amortisation 4,431 1,918 708 832 7,889
Segment assets 94,392 23,657 13,226 7,086 138,361
Segment liabilities 68,232 15,135 12,693 9,330 105,390
26 WEEKSED 1 OCTOBER 2022
Other International
UK Asia Pacific GBP'000 Eliminations GBP'000 Total
GBP'000 GBP'000 GBP'000
Revenue
Omni-channel 72,280 11,826 5,120 (37,665) 51,561
Wholesale 2,182 3,141 8,036 13,359
Total revenue 74,462 14,967 13,156 (37,665) 64,920
Segment profit/(loss) 665 (1,969) 1,703 399
Central costs (1,700)
Store closure credit 210
Australia acquisition
costs (933)
Sweden acquisition costs (193)
Operating loss (2,217)
Share of results of
associates 36
Finance income 5
Finance expense (1,574)
Profit before tax (3,750)
Other International
UK Asia Pacific GBP'000 Central Total
GBP'000 GBP'000 GBP'000 GBP'000
Segment capital
expenditure 2,786 614 1,429 29 4,858
Segment depreciation and
amortisation 3,955 926 457 996 6,334
Segment assets 84,413 20,994 14,132 8,107 127,646
Segment liabilities 62,229 8,617 14,341 10,607 95,794
52 WEEKSED 1 APRIL 2023
Other International
UK Asia Pacific GBP'000 Eliminations GBP'000 Total
GBP'000 GBP'000 GBP'000
Revenue
Omni-channel 171,615 27,234 13,073 (77,677) 134,245
Wholesale 4,918 4,254 15,712 24,884
Total revenue 176,533 31,488 28,785 (77,677) 159,129
Segment profit/(loss) 533 (1,222) 12,398 11,709
Central costs (5,374)
Store closure credit 205
Impairment credit related
to property, plant and
equipment 850
Impairment credit related
to right-of-use assets 12,949
Impairment charge related
to intangible asset (2,366)
Australia acquisition
costs (806)
Sweden acquisition costs (193)
Operating profit 16,974
Share of results of
associates 52
Finance income 11
Finance expense (3,887)
Profit before tax 13,150
Other International
UK Asia Pacific GBP'000 Central Total
GBP'000 GBP'000 GBP'000 GBP'000
Segment capital
expenditure 7,866 1,101 1,731 138 10,836
Segment depreciation and
amortisation net of
impairment (6,142) 4,942 1,747 1,960 2,507
Segment assets 108,065 27,812 14,539 8,213 158,629
Segment liabilities 72,006 16,312 13,877 10,290 112,485
For the purposes of monitoring segment performance and
allocating resources between segments, the Chief Operating Decision
Maker, which is deemed to be the Board, monitors the tangible,
intangible and financial assets. All assets are allocated to the
reportable segment.
(b) Product categories
Leather accessories account for around 90% of the Group's
revenues, of which bags represent over 70% of revenues. Other
important product categories include small leather goods, shoes,
soft accessories and women's ready-to-wear. Net asset information
is not allocated by product category.
7. INVESTMENT IN MULBERRY JAPAN CO. LIMITED
During the period the Group, via its subsidiary Mulberry Trading
Holding Company Limited and its Joint Venture partner Onward
Holding Co Limited, invested additional share capital of GBP661,000
each into Mulberry Japan Co. Limited the proceeds of which were
used to repay trading loans to both parties. Following this
investment on 27 June 2023 the Group acquired the 50% share capital
owned by Onward Holding Co Limited for a purchase price of 1 Yen
and, following the acquisition, the Group now owns 100% of Mulberry
Japan Co. Limited.
8. ACQUISTION OF NEW ZEALAND STORE
On 12 May 2023 the Group acquired one store previously operated
by our New Zealand franchisee. The Group paid GBP238,000 to
purchase the assets from the franchisee. The store is being
operated by a branch of Mulberry Company (Australia) Pty
Limited.
9. EVENTS AFTER THE REPORTING PERIOD
There are no events to report after the reporting period.
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END
IR VKLFLXFLZFBV
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