TIDMMUL
RNS Number : 9281G
Mulberry Group PLC
13 June 2013
MULBERRY GROUP PLC ("Mulberry" or the "Group")
PRELIMINARY RESULTS FOR THE YEAR ENDED 31 MARCH 2013
Mulberry Group plc, the English luxury brand, is pleased to
announce its results for the year ended 31 March 2013.
FINANCIAL HIGHLIGHTS
-- Full year results in line with guidance given on 22 March 2013
-- Total revenue of GBP165.1 million (2012: GBP168.5 million)
-- Retail revenue up 8% to GBP107.2 million, up 6% like-for-like
-- Wholesale revenue down 16% to GBP57.9 million, reflecting
European account rationalisation and destocking by Asian
partners
-- Profit before tax of GBP26.0 million (2012: GBP36.0 million),
reflecting an investment in directly operated international stores
and a contraction in gross margin
-- Basic earnings per share of 32.2p (2012: 43.9p)
-- Proposed dividend of 5.0p per share (2012: 5.0p per share)
OPERATING HIGHLIGHTS
-- 17 new international stores opened, in line with plan
-- Construction of second UK factory completed on 3 June 2013
-- Enhanced product range including bags, small leather goods and men's accessories
-- Established regional structure and invested in talent across the business
CURRENT TRADING AND OUTLOOK
-- Retail revenue up 9% for the 10 weeks to 8 June 2013, like-for-like sales up 6%
-- Modest growth in wholesale sales expected for 2013/14
-- Three new stores opened since 31 March 2013; targeting 15 to 20 new stores during 2013/14
BRUNO GUILLON, CHIEF EXECUTIVE, COMMENTED:
"Mulberry ended the year to 31 March 2013 in line with the
guidance given in March. Our retail sales increased 8% during the
year, however this was offset by lower sales from the wholesale
business.
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."
FOR FURTHER DETAILS PLEASE CONTACT:
Pelham Bell Pottinger
Daniel de Belder / Lucy Miles 020 7861 3232
Mulberry Investor Relations
Amelia Fincher 020 7605 6771
Altium
Ben Thorne / Katie Hobbs 020 7484 4040
Barclays
Jon Bathard-Smith 020 7623 2323
Business review
Total revenue for the year to 31 March 2013 was GBP165.1
million, down 2% from GBP168.5 million in 2012, reflecting growth
in retail sales offset by a decline in wholesale sales.
RETAIL
Our own stores and concessions saw continued growth with
revenues up 8% to GBP107.2 million (2012: GBP99.7 million) and up
6% like-for-like. This was achieved against a backdrop of very
strong growth last year of 36% and a challenging economic climate
in the UK and Europe as well as a reduction in tourist spending in
the London stores.
-- UK retail sales were up 6% to GBP91.8 million (2012: GBP86.9 million);
-- International retail sales were up 20% to GBP15.4 million
(2012: GBP12.8 million). During the period we opened seven new
directly operated stores in the USA, Germany and Switzerland;
-- Online sales, which are included in the segments above, were
up 21% to GBP17.6 million, accounting for 11% of Group sales (2012:
9%).
WHOLESALE
Wholesale revenue was down 16% to GBP57.9 million (2012: GBP68.8
million), reflecting two key factors:
-- The quality of the European wholesale channel was improved
through rationalisation of accounts; and
-- A slowdown of demand in Asia following very strong sales over
the last two years driven by certain key products. This resulted in
a period of destocking and cautious re-ordering by our Asian
franchise partners during the year to 31 March 2013.
Although these factors have resulted in lower wholesale sales
this year, the steps that we are taking to improve the quality of
the wholesale distribution network are expected to have a positive
impact on both the retail and wholesale businesses in the
future.
During the year we opened ten partner stores: a flagship store
in Singapore, five stores in Korea, and one store in each of
Shanghai, Beijing, Nagoya and Bahrain.
FINANCIAL
Gross margin was 63.3% for the year to 31 March 2013 (2012:
66.2%) due largely to a catch-up in product related overheads
relative to sales which have normalised this year after rapid sales
growth in the previous two years. In addition, gross margin was
affected by higher raw materials costs which were not reflected in
prices until November 2012.
Net operating expenses for the period increased by GBP2.9
million to GBP79.0 million (2012: GBP76.1 million). This includes
GBP6.3 million additional costs related to new directly operated
international stores offset by cost savings in other areas.
The Group had an effective tax rate of 28.2% for the year (2012:
29.7%) resulting in a tax charge of GBP7.3 million (2012: GBP10.7
million). We expect to see a decrease in the effective tax rate
over the next two years in line with the announced reduction in UK
corporation tax rates.
Due to the reduction in gross margin and the investment in
directly operated international stores, profit before tax fell 28%
to GBP26.0 million (2012: GBP36.0 million).
Capital expenditure for the period was GBP16.9 million, of which
GBP8.8 million related to new stores, GBP4.4 million to factories
and GBP2.9 million to investment in IT systems.
Inventories have increased to GBP35.7 million from GBP32.5
million at the start of the period partly reflecting new store
openings but also lower sales than originally anticipated. Overall,
the Group balance sheet remains strong with cash of GBP21.9 million
at 31 March 2013 (2012: GBP27.3 million) and no debt.
The cash generated from operations for the year amounted to an
inflow of GBP24.2 million (2012: inflow of GBP30.1 million).
Basic earnings per share for the year decreased by 27% to 32.2p
(2012: 43.9p).
The Board is recommending the payment of a dividend on the
ordinary shares of 5.0p per ordinary share (2012: 5.0p) which will
be paid on 9 September 2013 to shareholders on the register on 16
August 2013.
STRATEGY
We have previously outlined Mulberry's four long term strategic
themes and over the last 12 months we have taken the following
steps:
1. Reinforce luxury positioning:
-- Made in England: our second factory in Somerset, UK, was
completed during June 2013, and it will double our UK production
capacity; and
-- Distribution: we opened retail stores in prime locations with
an updated store concept and rationalised the wholesale
distribution network in Europe.
2. International expansion:
We continue to focus on prime retail locations complemented by
high quality wholesale accounts. During the year we:
-- Improved our retail and franchise store network:
-- Opened seven directly operated stores and ten partner stores
in prime retail locations, in line with our target of 15-20 stores
per annum. This brings our global store footprint to 115 stores,
including directly operated and partner stores;
-- Consolidated our Middle East franchise operations, appointing
Chalhoub Group to operate our business in the region (excluding
Qatar) and accelerating the store opening plans over the next two
to three years; and
-- Increased the quality of our multi-brand distribution network
through a European account rationalisation, continuing to build and
maintain strategic partnerships with key department store
accounts.
3. Product development
A number of product development initiatives have been completed
during the year which will launch with the AW13 collection in
stores from June to September 2013. For example:
-- In the women's bags category we have reinforced our core and
entry level offerings under GBP1,000 with additional leather,
colour and component offerings and the continued introduction of
new styles. The price architecture of the offering has also been
extended at the higher end of the Mulberry range, with the
introduction of handbags priced between GBP1,000 and GBP1,700;
-- We have increased the colour and style options for small
leather goods, belts and fashion accessories; and
-- The men's accessories category has been significantly
reinforced, with a 50% increase in product lines for AW13 compared
to AW12. Growth of this category is an area of opportunity for the
brand, particularly in Asian markets.
4. Leverage operations to support growth
One of our key strategies is to maintain a balanced investment
programme including new stores, factory facilities and IT systems.
During the year to 31 March 2013 we invested in all three areas
with GBP8.8 million in capital expenditure spent on stores, GBP4.4
million on our UK factories and GBP2.9 million on IT systems.
We have also enhanced the organisation structure with an
investment in talent throughout the organisation and a move to
regional reporting lines from 1 April 2013. Regional heads have
been appointed for Europe and North America and the new structure
is designed to bring consistency and co-ordination between the
retail and wholesale channels and drive international growth
through regional focus and accountability.
During the year we completed a review of our supply chain. We
have already implemented an improved wholesale ordering timetable
and are now commencing a project for the implementation of a new
integrated supply chain system which is expected to be completed
during the financial year ending 31 March 2015.
While investing for future growth, we continue to carefully
manage investments and costs throughout the business.
CREATIVE DIRECTOR
As previously announced, Emma Hill, our Creative Director, has
informed the Company that she wishes to leave after a very
successful period at Mulberry during which she has built a strong
and talented creative team working for her. The main SS14
collection has been completed and Emma continues to work in the
business finalising the SS catwalk collection which will be
launched on 15 September 2013 during London Fashion Week. The
timing of her departure is currently under discussion and has yet
to be finalised.
CURRENT TRADING AND OUTLOOK
The outlook for both the retail and wholesale businesses for the
year to 31 March 2014 remains challenging given Mulberry's heavy
reliance upon the UK and European markets where the economic
climate continues to be difficult.
The trading conditions in Mulberry's more developed domestic
market highlight the importance of our international growth
strategy. We continue to take the necessary steps to build our
businesses in the USA and Asia, opening stores in prime retail
locations and investing in marketing initiatives that highlight the
brand's heritage and craftsmanship. The Asian customer is important
globally as tourism continues to be a critical component of luxury
sales, and we are particularly focused on raising our brand
awareness in this market.
During the 10 weeks to 8 June 2013, total Retail sales were 9%
above the same period last year (like-for-like sales up 6%).
The wholesale order book for SS14 is building satisfactorily and
we expect modest growth in wholesale sales for the year to 31 March
2014.
Since the year-end we have opened directly operated stores in
Berlin and Vienna and a partner store in Palma de Mallorca. We
continue to target 15 to 20 new international store openings per
annum, being a combination of both directly operated and partner
stores.
Capital expenditure for the year to 31 March 2014 is expected to
be in the order of GBP20.0 million, subject to the timing of new
store openings and other investments. This continues to be funded
from internally generated cashflow.
During the year to 31 March 2014 we will continue with our
global expansion strategy, focusing on the transition of Mulberry
from a UK success story into a global luxury brand.
Consolidated income statement
Year ended 31 March 2013
Note 2013 2012
GBP'000 GBP'000
Revenue 165,130 168,451
Cost of sales (60,623) (56,964)
Gross profit 104,507 111,487
Administrative expenses (79,413) (76,565)
Other operating income 437 495
Operating profit 25,531 35,417
Share of results of associates 477 562
Finance income 48 72
Finance expense (30) (50)
Profit before tax 26,026 36,001
Tax (7,333) (10,700)
Profit for the year 18,693 25,301
========= =========
Attributable to:
Equity holders of the parent 18,693 25,301
========= =========
pence pence
Basic earnings per share 4 32.2 43.9
Diluted earnings per share 4 32.0 43.4
Consolidated statement of comprehensive income
Year ended 31 March 2013
2013 2012
GBP'000 GBP'000
Profit for the year 18,693 25,301
Exchange differences on translation of
foreign operations 45 (207)
Total comprehensive income for the year 18,738 25,094
========= =========
Attributable to:
Equity holders of the parent 18,738 25,094
========= =========
Consolidated balance sheet
At 31 March 2013
2013 2012
GBP'000 GBP'000
Non-current assets
Intangible assets 5,740 3,984
Property, plant and equipment 33,494 24,212
Interests in associates 281 357
Deferred tax assets 201 -
39,716 28,553
Current assets
Inventories 35,698 32,546
Trade and other receivables 14,233 14,912
Cash and cash equivalents 21,858 27,293
71,789 74,751
Total assets 111,505 103,304
--------- ---------
Current liabilities
Trade and other payables (29,800) (34,627)
Current tax liabilities (2,996) (6,188)
(32,796) (40,815)
--------- ---------
Non-current liabilities
Deferred tax liability - (26)
Total liabilities (32,796) (40,841)
--------- ---------
Net assets 78,709 62,463
========= =========
Equity
Share capital 2,992 2,982
Share premium account 11,835 11,578
Own share reserve (2,937) (3,966)
Capital redemption reserve 154 154
Special reserves 1,467 1,467
Foreign exchange reserve 224 179
Retained earnings 64,974 50,069
Total equity 78,709 62,463
========= =========
Consolidated statement of changes in equity
Year ended 31 March 2013
Equity attributable to equity holders of the parent
Share Own Foreign
Share premium share Capital Special exchange Retained
capital account reserve reserve reserve reserve earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1 April
2011 2,943 7,007 (621) 154 1,467 386 30,696 42,032
Total comprehensive
income for the
year - - - - - (207) 25,301 25,094
Issue of share
capital 10 3,782 - - - - - 3,792
Charge for employee
share-based payments - - - - - - 701 701
Exercise of share
options 29 789 - - - - (4,319) (3,501)
Own shares - - (3,345) - - - - (3,345)
Ordinary dividends
paid - - - - - - (2,310) (2,310)
As at 31 March
2012 2,982 11,578 (3,966) 154 1,467 179 50,069 62,463
Total comprehensive
income for the
year - - - - - 45 18,693 18,738
Issue of share
capital 1 - - - - - - 1
Charge for employee
share-based payments - - - - - - 888 888
Exercise of share
options 9 257 - - - - (1,770) (1,504)
Own shares - - 1,029 - - - - 1,029
Ordinary dividends
paid - - - - - - (2,906) (2,906)
As at 31 March
2013 2,992 11,835 (2,937) 154 1,467 224 64,974 78,709
========== ========= ========= ========== ========== ========== =========== ========
Consolidated cash flow statement
Year ended 31 March 2013
2013 2012
GBP'000 GBP'000
Operating profit for the year 25,531 35,417
Adjustments for:
Depreciation of property, plant and equipment 5,553 3,992
Amortisation of intangible assets 803 494
Profit on disposal of property, plant and
equipment (26) (8)
Effects of foreign exchange (270) (109)
Share-based payments charge 1,011 701
Operating cash flows before movements in
working capital 32,602 40,487
Increase in inventories (3,101) (10,151)
Decrease/(increase) in receivables 56 (2,750)
(Decrease)/increase in payables (5,180) 2,530
Cash generated from operations 24,377 30,116
Corporation taxes paid (10,922) (8,495)
Interest paid (30) (50)
Net cash inflow from operating activities 13,425 21,571
--------- ---------
Investing activities:
Interest received 49 96
Dividend received from associate 518 408
Purchases of property, plant and equipment (13,976) (8,632)
Proceeds from disposal of property, plant
and equipment 37 33
Acquisition of intangible fixed assets (2,108) (2,153)
Net cash used in investing activities (15,480) (10,248)
--------- ---------
Financing activities:
Dividends paid (2,906) (2,310)
Proceeds on issue of shares 1 818
Settlement of share awards (1,504) (4,358)
Disposal of own shares 1,029 447
Net cash used in financing activities (3,380) (5,403)
--------- ---------
Net (decrease)/increase in cash and cash
equivalents (5,435) 5,920
Cash and cash equivalents at beginning of
year 27,293 21,373
Cash and cash equivalents at end of year 21,858 27,293
========= =========
Notes
1. Basis of preparation
The financial information in this announcement, which was
approved by the Board of Directors on 12 June 2013, does not
constitute the Company's statutory accounts for the years ended 31
March 2013 or 2012, but is derived from those accounts.
Statutory accounts for the year ended 31 March 2012 have been
delivered to the Registrar of Companies and those for the year
ended 31 March 2013 have been approved and will be delivered to the
Registrar of Companies following the Company's Annual General
Meeting. The auditors have reported on those accounts, their
reports were unqualified and did not draw attention to any matters
by way of emphasis without qualifying their reports and did not
contain any statement under section 498 (2) or (3) of the Companies
Act 2006.
Whilst the financial information included in this preliminary
announcement has been completed in accordance with International
Financial Reporting Standards (IFRS), this announcement itself does
not contain sufficient information to comply with IFRS.
2. Accounting policies
The Group's financial statements for the year ended 31 March
2013 have been prepared in accordance with the measurement criteria
of the International Financial Reporting Standards (IFRS) as
adopted for use in the European Union.
For the year ended 31 March 2013, the financial year runs for
the 52 weeks to 30 March 2013 (2012: 53 weeks ended 31 March
2012).
At the date of authorisation of these financial statements, the
following Standards and Interpretations which have not been applied
in these financial statements were in issue but not yet
effective:
-- IFRS 9: Financial instruments
-- IFRS 10: Consolidated Financial Statements
-- IFRS 11: Joint Arrangements
-- IFRS 12: Disclosure of Interests in Other Entities
-- Amendment to IAS 27: Separate Financial Statements
-- Amendment to IAS 28: Investments in Associates and Joint
Ventures
-- IFRS 13: Fair Value Measurement
-- IAS 12: Deferred Tax
-- IAS 19: Employee Benefits
-- IFRS 7 (amended) and IAS 32 (amended): Disclosures -
offsetting financial assets and financial liabilities
-- IFRS 1 (amended): Government Loans
-- IFRS 10, IFRS 12 and IAS 27 (amended): Investment Entities
The directors do not expect that the adoption of the standards
listed above will have a material impact on the financial
statements of the Group in future periods, except IFRS 12 will
impact the disclosure of interests Group has in other entities.
3. Dividends
The dividends approved and paid during the year are as
follows:
2013 2012
GBP'000 GBP'000
Dividend for the year ended 31 March 2012 of 5p (2011: 4p)
per share paid in September 2012 2,906 2,310
--------- ---------
Proposed dividend for the year ended 31 March 2013 of 5p
per share (2012: 5p) 2,992 2,982
--------- ---------
This proposed dividend is subject to approval by shareholders at
the Annual General Meeting and has not been included as a liability
in these financial statements.
4. Earnings per share ('EPS')
2013 2012
pence pence
Basic earnings per share 32.2 43.9
Diluted earnings per share 32.0 43.4
Earnings per share is calculated based on the following
data:
2013 2012
million million
Weighted average number of ordinary shares for the
purpose of basic EPS 58.1 57.6
Effect of dilutive potential ordinary shares: share
options 0.4 0.7
--------- ---------
Weighted average number of ordinary shares for the
purpose of diluted EPS 58.5 58.3
--------- ---------
The weighted average number of ordinary shares in issue during
the year excludes those held by the Mulberry Group Plc Employee
Share Trust.
5. Information
Copies of the Annual Report and financial statements will be
posted to shareholders. Further copies can be obtained from
Mulberry Group plc's registered office at The Rookery, Chilcompton,
Bath, Somerset, BA3 4EH.
Copies of this announcement are available for a period of one
month from the date hereof from the Company's registered office,
and from the Company's nominated adviser, Altium Capital Limited,
30 St James's Square, London, SW1Y 4AL.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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