Mulberry Group PLC - Interim Results
January 27 2000 - 2:03AM
UK Regulatory
RNS Number:5103E
Mulberry Group PLC
27 January 2000
MULBERRY GROUP PLC
INTERIM RESULTS FOR THE SIX MONTHS TO 30 SEPTEMBER 1999
HIGHLIGHTS:
MULBERRY SEES THE FIRST SIGNS OF RECOVERY
After two incredibly difficult years we are seeing
the first signs of recovery and the benefits of all the
hard work of our management and staff.
A clear strategy of focusing on the core accessories
products combined with the steps we have taken to
simplify the business is producing results.
Our licensing programme is now well underway with
Kravets in the USA and Toray in Japan and we continue to
look for new strategic global partners.
Like for like sales for the last six months in our
full price UK retail outlets increased by 4% overall and
12% for Accessories compared to last year. Like for like
sales for the six weeks to 15 January 2000 were 8.1%
ahead.
The key ingredients in our turnaround have been
focused marketing and merchandising and above all,
design.
Chairman, Roger Saul comments 'As fashion moves away
from minimalism towards a return to colour and texture,
Mulberry is now perfectly placed to capture this new
feeling. We are already seeing a groundswell of success
with a 12% increase in handbag sales this last Autumn.'
For further information:
Roger Saul
Chairman and Designer, Mulberry Group Plc Tel:
01749 340 532
CHAIRMAN'S STATEMENT
After two incredibly difficult years we are seeing the
first signs of recovery and the benefits of all the hard
work of our management and staff. A clear strategy of
focusing on the core accessories products combined with
the steps we have taken to simplify the business is
producing results. Our licensing programme is now well
underway with Kravets in the USA and Toray in Japan and
we continue to look for new strategic global partners.
We maintain our policy of improving the efficiency of our
operations whilst strengthening the innovation and design
flair that have been the foundation of the Mulberry
brand.
This six month period covers the last four months of the
Spring/Summer 1999 season and the first two months of the
Autumn/Winter 1999 season. The results for Spring/Summer
continued the pattern of last year with reducing sales at
both retail and wholesale. The Autumn/Winter 1999 season
has shown a markedly different pattern with increased
sales at retail.
Like for like sales for the last six months in our full
price UK retail outlets increased by 4% overall and 12%
for Accessories compared to last year. Like for like
sales for the six weeks to 15 January 2000 were 8.1%
ahead. Margins improved during the period. We have
avoided the price or margin pressure reported by many
British retailers and stocks are tight. In Europe our
major franchise shop partners have also had a good Autumn
season.
Accordingly, we are confident of an improved result for
the second six months to 31 March 2000 compared to last
year. The key ingredients in our turnaround have been
focused marketing and merchandising and above all,
design. We continue to reduce overheads and close non-
profit making operations.
Over the last two years we have moved approximately 50%
of our accessory sourcing from the UK to overseas. The
full margin benefit of this sourcing is now in place for
the second six months of the year as this programme
becomes fully operational.
FINANCIAL REVIEW
Sales were #12.1 million (1998: #12.9 million) producing
a reduced loss before tax of #0.70 million (1998: #0.80
million). The Board is not recommending the payment of
an interim dividend.
Sales were reduced by 6%. This reduction was more than
offset by an overall improvement of 4.5% in gross margin
for the Group. This resulted from the success of both
our stock reduction policy and better buying, with the
result that we sold less product at mark-down compared to
the previous year when we were clearing excess stocks.
Margins in our core accessories division were 4.5% higher
than last year due to improved manufacturing efficiency
and the increasing benefit of international sourcing.
The continued focus on cost control resulted in a further
4% reduction, on a like for like basis, in operating
expenses in the period. (1998 operating expenses were
reduced by #0.5 million received as compensation for loss
of sales from our former distributor in Japan).
Interest costs were #0.14 million less than the
comparable period last year at #0.33 million, reflecting
the reduction in UK interest rates.
Stocks have reduced to #6.2 million (1998: #7.2 million)
and are #1.0 million lower than a year ago.
HOME LICENSING
The agreement with Kravet to license our home furnishings
business, which had been signed at the date of my last
report, has been successfully implemented. All stocks
were transferred on 1 September 1999, related overheads
have been cut and all costs of the transaction have been
reflected in this period.
We have moved from a full margin sales, design and
sourcing business, with the associated overheads, to a
royalty income stream based structure controlling design
and brand image with dramatically reduced costs. Sales
for the period include #1.6 million for the sale of stock
to Kravet which was part of the agreement.
Sales by Kravet in the four months to 31 December 1999
have been at higher levels than last year and we have now
designed the largest and most exciting new ranges for
launch in Spring. We are confident that this will lead
to a growing level of royalty receipts.
JAPAN
The appointment of Toray as our master licensee has been
concluded successfully and following approval by
shareholders on 1 November 1999, their investment of
#250,000 in 1% preference shares has been completed. We
are currently discussing the first potential sub-licenses
and look forward to developing this business
relationship. This is a long-term project of great
strategic importance and we anticipate that the benefits
will begin to show in the year to 31 March 2002.
Roger Saul
Chairman
27 January 2000
CONSOLIDATED PROFIT AND LOSS ACCOUNT
Unaudited Unaudited Audited
6 6 12
months months months
to to to
30.9.99 30.9.98 31.3.99
#'000 #'000 #'000
TURNOVER 12,149 12,945 27,393
Cost of sales (6,143) (7,134) (14,974)
-------- -------- --------
- - -
GROSS PROFIT 6,006 5,811 12,419
Other operating expenses (6,374) (6,144) (13,291)
(net)
-------- -------- --------
- - -
OPERATING PROFIT/(LOSS) (368) (333) (872)
Group share of loss of
associated company - - (47)
Interest payable and similar
charges (330) (470) (860)
-------- -------- --------
- - -
Profit/(loss) on ordinary
activities before taxation (698) (803) (1,779)
Tax on profit/(loss) on
ordinary activities (note 2) - 240 (8)
-------- -------- --------
- - -
PROFIT/(LOSS) FOR THE PERIOD (698) (563) (1,787)
Dividends - - -
-------- -------- --------
- - -
RETAINED PROFIT/(ACCUMULATED (698) (563) (1,787)
LOSS)
======== ======== ========
Earnings/(loss) per share (3.32p) (2.70p) (8.57p)
Dividend per share Nil Nil Nil
pence pence pence
CONSOLIDATED BALANCE SHEET
Unaudited Unaudited Audited
30.9.99 30.9.98 31.3.99
#'000 #'000 #'000
FIXED ASSETS 5,803 6,284 6,168
CURRENT ASSETS
Stocks 6,178 7,225 6,396
Debtors 5,661 6,950 4,856
Cash 7 17 -
--------- --------- ---------
11,846 14,192 11,252
CREDITORS: Amounts falling
due within one year (12,029) (11,159) (10,986)
--------- --------- ---------
NET CURRENT (183) 3,033 266
(LIABILITIES)/ASSETS
--------- --------- ---------
TOTAL ASSETS LESS CURRENT
LIABILITIES 5,620 9,317 6,434
CREDITORS: Amounts falling
due after one year (1,934) (3,707) (2,050)
PROVISIONS FOR LIABILITIES
AND CHARGES - (10) -
--------- --------- ---------
NET ASSETS 3,686 5,600 4,384
========= ========= =========
CAPITAL AND RESERVES
Called up share capital 1,049 1,036 1,049
Reserves 2,637 4,564 3,335
--------- --------- ---------
3,686 5,600 4,384
========= ========= =========
CASH FLOW STATEMENT
Unaudited Unaudited Audited
6 months 6 months 12 months
to to to
30.9.99 30.9.98 31.3.99
#'000 #'000 #'000
Operating profit/(loss) (368) (333) (872)
Depreciation 409 494 883
Decrease/(increase) in 218 709 1,538
stocks
Decrease/(increase) in (805) (566) 1,256
debtors
Increase/(decrease) in 75 988 (490)
creditors
--------- --------- ---------
NET CASHFLOW FROM (471) 1,292 2,315
OPERATIONS
Interest (330) (470) (843)
Taxation 0 0 234
Capital expenditure (7) (466) (806)
Dividends paid 0 (56) (56)
--------- --------- ---------
NET CASHFLOW BEFORE (808) 300 844
FINANCING
Financing (654) (580) (429)
--------- --------- ---------
(DECREASE)/INCREASE IN CASH
IN THE PERIOD (1,462) (280) 415
========= ========= =========
RECONCILIATION OF NET
CASHFLOW TO MOVEMENT IN NET
DEBT
(Decrease)/Increase in cash
in the year (1,462) (280) 415
Cash outflow from decrease
in debt and lease finance 654 580 429
--------- --------- ---------
(808) 300 844
Inception of finance leases (38) (12) (54)
--------- --------- ---------
Movement in net debt (846) 288 790
NET DEBT, BEGINNING OF (8,847) (9,637) (9,637)
PERIOD
--------- --------- ---------
NET DEBT, END OF PERIOD (9,693) (9,349) (8,847)
========= ========= =========
NOTES
1. ACCOUNTING POLICIES
The interim results contained in this report, which
have not been audited, have been prepared using
accounting policies consistent with those used in the
preparation of the annual report and accounts for the
year ended 31 March 1999.
2. TAXATION
The corporation tax charge for the period is based on
the effective rate which it is estimated will apply
for the full year.
3. COMPARATIVE FIGURES
The comparative figures for the year ended 31 March
1999, which do not constitute statutory accounts, are
abridged from the company's statutory accounts which
have been filed with the Registrar of Companies. The
report of the auditors on these accounts was
unqualified and did not contain a statement under
section 237(2) or (3) of the Companies Act 1985.
4. APPROVAL AND DISTRIBUTION
This report was approved by the Board of Directors on
26 January 2000 and is being sent to all
shareholders. Additional copies are available from
the Company Secretary at the Registered Office:
Kilver Court, Shepton Mallet, Bath, BA4 5NF.
END
IR SEDFUMSSSELF
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