TIDMMUL
RNS Number : 7333U
Mulberry Group PLC
05 December 2013
MULBERRY GROUP PLC ("Mulberry" or the "Group")
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2013
Mulberry Group plc, the English luxury brand, announces its
results for the six months ended 30 September 2013.
FINANCIAL HIGHLIGHTS
-- Total H1 revenue up 2% to GBP78.1 million (2012: GBP76.5 million)
-- Retail revenue up 6% to GBP49.5 million, up 4% like-for-like
-- International retail revenue up 29%
-- Wholesale revenue down 5% to GBP28.6 million
-- Gross margin of 63.0% (2012: 61.3%)
-- Profit before tax of GBP7.2 million (2012: GBP10.0 million),
reflecting cost of continued investment in international expansion
and increased seasonality
OPERATING HIGHLIGHTS
-- Nine new international stores opened during the period
-- Second UK factory completed on time and to budget, with production ramp-up going to plan
-- New global web platform launched during July 2013
CURRENT TRADING AND OUTLOOK
-- Retail revenue up 3% for the nine weeks to 30 November 2013
(as adjusted for UK sample sale timing)
-- International retail revenue up 49%
-- Wholesale trend expected to continue for full year 2013/14 as cautious ordering continues
-- Two further stores opened since 30 September 2013; on track
to open 15 new stores during 2013/14
-- Contracts exchanged for Paris flagship store, scheduled to open during 2014/15
BRUNO GUILLON, CHIEF EXECUTIVE, COMMENTED:
"Mulberry has delivered 6% retail sales growth during the period
and 4% like-for-like growth. This includes UK retail sales which
were up 5% despite a tough economic climate and encouraging growth
in international retail sales which were up 29%. Wholesale sales
were 5% lower for the period, reflecting more conservative ordering
by European wholesale customers.
During the period, we completed the construction of our new
Somerset factory on time and to budget and the intensive training
of the 240 new staff recruited so far is progressing well. The
factory is already in production and is expected to be at full
capacity by mid-2014, allowing us to achieve our target of making
50% of our handbags in England for AW14.
We are also pleased with the launch of a new global web platform
during July 2013, which was the result of a two year project to
enhance customer experience across mobile, tablet and desktop and
deliver increased language and content capability.
Mulberry continues with its international expansion and we are
on track to open 15 new stores for the full year. I am also pleased
to announce that we have recently secured a location for a flagship
store in a prime location on Rue Saint-Honoré, Paris which is
scheduled to open during 2014/15. Located in a key tourist
destination, this store will generate global visibility for the
Mulberry brand."
FOR FURTHER DETAILS PLEASE CONTACT:
Pelham Bell Pottinger
Daniel de Belder / Julia Hanrahan 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
FINANCIAL REVIEW
Total revenue for the six months to 30 September 2013 was
GBP78.1 million, up 2% from GBP76.5 million during H1 2013,
reflecting retail sales growth against a modest decline in
wholesale sales.
Retail
Our own retail network saw continued growth with revenues up 6%
to GBP49.5 million (2012: GBP46.5 million) and up 4% like-for-like.
Within this figure, UK retail sales have remained solid and we have
seen encouraging growth in international retail sales:
-- UK retail sales (excluding online) were up 5% to GBP36.6
million (2012: GBP34.7 million). Footfall was down during the
period, however this was offset by stronger conversion rates and
higher average transaction values;
-- International retail sales (excluding online) were up 29% to
GBP6.3 million (2012: GBP4.9 million), reflecting an improvement in
North America and continued growth in Europe; and
-- Online sales were down 4% to GBP6.6 million, representing 8%
of Group sales (2012: 9%). This followed very strong growth during
the previous year and we expect online sales to grow over the
medium term, in line with industry trends and as we roll out
foreign language translations of our new web platform.
Wholesale
Wholesale revenue was down 5% to GBP28.6 million (2012: GBP30.0
million), reflecting cautious ordering from European wholesale
partners. Four franchise stores were opened during the period and
are listed under "International Expansion" below.
Financial
Gross margin was 63.0% for the six months to 30 September 2013
(2012: 61.3%) in line with our expectations and reflecting the
increased proportion of retail to wholesale sales.
Net operating expenses for the period increased by GBP5.1
million to GBP42.2 million (2012: GBP37.1 million). The main
elements of this increase were GBP2.3 million additional costs
related to new directly operated stores and GBP1.6m additional
employee costs. The employee costs include the creation of new
divisional management structures for the North American and
European operations to manage these growing businesses.
The increased percentage of sales through our retail stores as
we build the international networks makes the business more
seasonal with a greater proportion of profit generated in the
second half due to the important Christmas trading period. As a
result of this increased seasonality and our investment in
international expansion, H1 profit before tax fell 28% to GBP7.2
million (2012: GBP10.0 million).
The effective tax rate has risen to 29.7% for the period from
26.6% last year, largely as a consequence of increased unrelieved
tax losses generated in Europe.
Capital expenditure for the period was GBP10.7 million, up from
GBP8.3 million last year, of which GBP4.7 million related to retail
stores, GBP3.6 million to the UK factories and GBP2.0 million to
investment in IT systems.
Inventories have decreased as planned to GBP33.4 million from
GBP36.9 million at the same time last year. Overall, the Group
balance sheet remains strong with cash of GBP11.1 million at 30
September 2013 (2012: GBP12.6 million) and no debt.
OPERATING REVIEW
Production
"Made in England" anchors the authenticity of the Mulberry
brand. Our second factory in Somerset, UK, was completed during
June 2013. Two hundred and forty staff have been recruited (80% of
the planned total) and the training programme and factory
productivity are progressing in line with our expectations. During
the period we have recognised GBP0.8 million in Regional Growth
Fund support which has been used to offset the training and
overhead costs of the factory. The factory is expected to be
operating at full capacity by mid-2014, doubling our UK production
capacity. We expect to produce approximately 50% of our handbags in
England for AW14.
Global leather prices for luxury skins have increased by up to
16% during the period, and leather sourcing is a challenge that
continues to impact all leather goods manufacturers, including
Mulberry. Managing pricing and sourcing to maintain our gross
margin targets will continue to be a key priority for the
brand.
Product
Mulberry continues its search for a new Creative Director. In
the meantime, the design and product development teams in each of
our major product categories continue the seasonal refreshment of
our collections as usual.
Mulberry faces increased competition from mid-market brands
which has had an impact on sales of our entry price point handbags.
We are taking steps to address this challenge with continued
innovation and by extending and reinforcing our product mix. The
AW13 and SS14 collections include new handbag styles and an
increased range of small leather goods, belts, fashion accessories
and men's products.
The initial response to these new products has been encouraging.
For example, Small Leather Goods and Gifts increased to 14% of
sales from 13% during the same period last year and Men's product
sales have increased to 13% of full price retail sales from 11%
during the same period last year. Men's is an area of opportunity
and we are continuing to focus on supporting the category through
product innovation, communications and store space allocation.
For AW13, the Mulberry range included over 1,000 individual
products with over 60% of these priced below GBP500, ensuring
Mulberry remains accessible to its traditional customer base.
However, the new higher end bags that we have launched above
GBP1,000 are performing well. For example, the "Willow" and "Double
Zip Bayswater" styles have both been very popular, demonstrating
that Mulberry has the ability to attract a high-end luxury
customer.
International Expansion
North American retail sales were up 22% during the period and
European retail sales were up 36%, bringing international retail
sales to 8% of total revenue, up from 6% during the same period
last year.
We continue to focus upon opening stores in prime retail
locations around the world complemented by high quality wholesale
accounts. During H1 we opened five directly operated stores: USA
(1), Canada (2), Germany (1) and Austria (1) and four partner
stores: China (2), Palma de Mallorca (1) and Abu Dhabi (1). This
brings Mulberry's global store footprint to 123 stores, including
directly operated and partner stores.
Our strategy is to open a mix of standalone stores and
shop-in-shops in key department stores, with larger flagships in
key luxury and tourist destinations. All stores opened during the
period were standalone stores and we have focused on high traffic
locations and/or tourist locations where we will benefit from
footfall and increased visibility of the brand internationally.
Operations
During the six months to 30 September 2013 we have continued to
invest in new stores, factories and IT systems. Three important IT
projects were a focus for the period:
-- In July 2013 Mulberry launched its new global web platform,
the result of a two year project to optimise the customer shopping
journey and brand experience across tablet, mobile and desktop. The
platform will allow us to extend the ranges of languages and
currencies in which we operate and tailor content to meet local
market requirements;
-- Following the company's supply chain review last year we have
begun the implementation of a new integrated supply chain
management system. This project will give us end-to-end visibility
over the supply chain, allowing us to plan and allocate production
more effectively as well as improving forecasting and inventory
management. The project is on track to be completed during the
2014/15 financial year; and
-- We are part way through a global roll-out of a new point of
sale system into our own stores. Once the roll-out is complete, we
will use this till infrastructure to support a sophisticated CRM
application which will be implemented during the 2014/15 financial
year.
Brand
One of the key challenges for the Mulberry brand is to increase
its international recognition. We have focused upon raising brand
awareness through new store launch events, collaborations and press
campaigns in our growth markets. In addition we are raising
visibility of the brand in the UK market through London Fashion
week and initiatives including Harrods Christmas windows and a
capsule collection for Mr Porter which have generated positive
press and social media responses.
CURRENT TRADING AND OUTLOOK
During the nine weeks to 30 November 2013, total retail sales,
including UK and international, were up 3% compared to the same
period last year (excluding the impact of the sample sale which was
held in London during November last year and will take place in Q4
this year). Without adjusting for the sample sale, total retail
sales were flat for the period.
International retail sales have shown an encouraging trend, up
49% during the nine weeks to 30 November 2013.
Since the half year-end we have opened a directly operated store
in Ireland and a partner store in Sweden. We are on track to open a
total of 15 new international stores during the year.
We expect H1 wholesale trends to continue for the rest of the
year to 31 March 2014.
Our domestic UK market, where we have largely completed our
network of stores, continues to be of prime importance to our
business and we continue to seek ways to build market share. Our
business in the rest of the world is relatively undeveloped and
this is where we expect to achieve substantial growth in the
future. Consequently, we are taking the necessary steps to build
Mulberry's global brand awareness, opening stores in prime
international retail locations and investing in marketing
initiatives that highlight the brand's heritage and craftsmanship.
Over the last few weeks we have taken the important step of
securing a flagship store in a prime location on Rue Saint-Honoré,
Paris which is scheduled to open during 2014/15.
We continue to focus on the transition of Mulberry from a UK
success story into a global brand. Capital expenditure for the year
to 31 March 2014 is expected to be around GBP19.0 million, subject
to the timing of new store openings and other investments. This
significant investment continues to be funded from internally
generated cash flows.
Consolidated income statement
Six months ended 30 September 2013
Note Unaudited Unaudited Audited
six months six months year ended
30 Sept 30 Sept 31 Mar 2013
2013 2012 GBP'000
GBP'000 GBP'000
Revenue 78,094 76,495 165,130
Cost of sales (28,861) (29,641) (60,623)
Gross profit 49,233 46,854 104,507
Administrative expenses (42,402) (37,248) (79,413)
Other operating income 234 179 437
Operating profit 7,065 9,785 25,531
Share of results of associate 157 197 477
Finance income 25 37 48
Finance expense (20) (14) (30)
Profit before tax 7,227 10,005 26,026
Tax 4 (2,150) (2,663) (7,333)
Profit for the period 5,077 7,342 18,693
============ ============ =============
Attributable to:
Equity holders of the parent 5,077 7,342 18,693
============ ============ =============
Pence Pence Pence
Basic earnings per share 5 8.7 12.9 32.2
Diluted earnings per share 5 8.6 12.9 32.0
All activities arise from continuing operations.
Consolidated statement of comprehensive income
Six months ended 30 September 2013
Unaudited Unaudited Audited
six months six months year ended
30 Sept 30 Sept 31 Mar 2013
2013 2012 GBP'000
GBP'000 GBP'000
Profit for the period 5,077 7,342 18,693
Exchange differences on translation
of foreign operations (453) (160) 45
Total comprehensive income
for the period 4,624 7,182 18,738
============ ============ =============
Attributable to:
Equity holders of the parent 4,624 7,182 18,738
============ ============ =============
Consolidated balance sheet
At 30 September 2013
Unaudited Unaudited Audited
30 Sept 30 Sept 2012 31 Mar 2013
2013 GBP'000 GBP'000
GBP'000
Non-current assets
Intangible assets 6,863 4,771 5,740
Property, plant and equipment 37,985 28,459 33,494
Interests in associates 423 507 281
Deferred tax assets 780 90 201
---------- --------------- -------------
46,051 33,827 39,716
Current assets
Inventories 33,365 36,867 35,698
Trade and other receivables 17,372 17,189 14,233
Cash and cash equivalents 11,143 12,570 21,858
---------- --------------- -------------
61,880 66,626 71,789
Total assets 107,931 100,453 111,505
---------- --------------- -------------
Current liabilities
Trade and other payables (24,500) (31,226) (29,800)
Current tax liabilities (2,398) (2,589) (2,996)
---------- --------------- -------------
(26,898) (33,815) (32,796)
Non-current liabilities
Deferred tax liability - - -
Total liabilities (26,898) (33,815) (32,796)
Net assets 81,033 66,638 78,709
========== =============== =============
Equity
Share capital 2,994 2,983 2,992
Share premium account 11,852 11,578 11,835
Own share reserve (2,593) (3,756) (2,937)
Capital redemption reserve 154 154 154
Special reserves 1,467 1,467 1,467
Foreign exchange reserve (229) 19 224
Retained earnings 67,388 54,193 64,974
Total equity 81,033 66,638 78,709
========== =============== =============
Consolidated statement of changes in equity
Six months ended 30 September 2013
Equity attributable to equity holders of the parent
Share Share Own Capital Special Foreign Retained Total
capital premium share reserve reserves exchange earnings
account reserve reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
As at 1 April
2012 2,982 11,578 (3,966) 154 1,467 179 50,069 62,463
Total comprehensive
income for the
period - - - - - (160) 7,342 7,182
Issued share capital 1 - - - - - - 1
Charge for employee
share-based payments - - - - - - 536 536
Own shares - - (1) - - - - (1)
Exercise of share
options - - 211 - - - (848) (637)
Ordinary dividends
paid - - - - - - (2,906) (2,906)
--------- --------- --------- --------- ---------- ---------- ---------- --------
As at 30 September
2012 2,983 11,578 (3,756) 154 1,467 19 54,193 66,638
Total comprehensive
income for the
period - - - - - 205 11,351 11,556
Charge for employee
share-based payments - - - - - - 352 352
Exercise of share
options 9 257 - - - - (922) (656)
Own shares - - 819 - - - - 819
As at 31 March
2013 2,992 11,835 (2,937) 154 1,467 224 64,974 78,709
Total comprehensive
income for the
period - - - - - (453) 5,077 4,624
Charge for employee
share-based payments - - - - - - 627 627
Own shares - - 344 - - - - 344
Exercise of share
options 2 17 - - - - (358) (339)
Ordinary dividends
paid - - - - - - (2,932) (2,932)
As at 30 September
2013 2,994 11,852 (2,593) 154 1,467 (229) 67,388 81,033
========= ========= ========= ========= ========== ========== ========== ========
Consolidated cash flow statement
Six months ended 30 September 2013
Unaudited Unaudited Audited
six months six months year ended
30 Sept 2013 30 Sept 31 Mar 2013
GBP'000 2012 GBP'000
GBP'000
Operating profit for the period 7,065 9,785 25,531
Adjustments for:
Depreciation of property, plant
and equipment 3,365 2,628 5,553
Amortisation of intangible
assets 639 354 803
(Profit)/loss on sale of property,
plant and equipment (11) 32 (26)
Effects of foreign exchange 479 146 (270)
Share-based payments charge 627 536 1,011
Operating cash flows before
movements in working capital 12,164 13,481 32,602
Decrease/(increase) in inventories 2,322 (4,273) (3,101)
(Increase)/decrease in receivables (3,139) (2,271) 533
Decrease in payables (5,016) (4,321) (5,657)
Cash generated by operations 6,331 2,616 24,377
Corporation taxes paid (3,192) (6,379) (10,922)
Interest paid (20) (14) (30)
Net cash inflow/(outflow) from
operating activities 3,119 (3,777) 13,425
-------------- ------------ ------------------
Investing activities:
Interest received 25 40 49
Dividend received from associate - - 518
Purchases of property, plant
and equipment (9,009) (6,724) (13,976)
Proceeds from sales of property,
plant and equipment 31 - 37
Acquisition of intangible fixed
assets (1,954) (1,057) (2,108)
Net cash used in investing
activities (10,907) (7,741) (15,480)
-------------- ------------ ------------------
Financing activities:
Dividends paid (2,932) (2,906) (2,906)
Proceeds on issue of shares - - 1
Settlement of share awards (333) (299) (1,504)
Disposal of own shares 338 - 1,029
Net cash used in financing
activities (2,927) (3,205) (3,380)
-------------- ------------ ------------------
Net decrease in cash and cash
equivalents (10,715) (14,723) (5,435)
Cash and cash equivalents at
beginning of period 21,858 27,293 27,293
Cash and cash equivalents at
end of period 11,143 12,570 21,858
============== ============ ==================
Notes to the condensed financial statements
Six months ended 30 September 2013
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 six months
ended 30 September 2013 (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 information for the year ended 31 March 2013 does not
constitute statutory accounts as defined in section 434 of the
Companies Act 2006. A copy of the statutory accounts for that year
has been delivered to the Registrar of Companies. The auditor's
report on those 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) or (3) of the Companies Act
2006.
The interim financial statements for the six months ended 30
September 2013, have not been reviewed or audited.
2. Significant accounting policies
The accounting policies and methods of computation followed in
the interim financial statements are consistent with those as
published in the Group's Annual Report and Financial Statements for
the year ended 31 March 2013, except for the adoption of the
following standards which have had no quantitative impact on the
financial statements:
-- IFRS 10: Consolidated Financial Statements
-- IFRS 11: Joint Arrangements
-- 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 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.
3. Going concern
After making enquiries, the Directors have a reasonable
expectation that the Company and the Group will have adequate
resources to continue in operational existence for the foreseeable
future. Accordingly, they continue to adopt the going concern basis
in preparing the half year results.
4. Taxation
The tax charge is calculated by applying the forecast full year
effective tax rate to the interim profit.
5. Earnings per share ('EPS') and share issue
Six months Six months Year ended
30 Sept 2013 30 Sept 31 Mar 2013
p 2012 p
p
Basic earnings per share 8.7 12.9 32.2
Diluted earnings per share 8.6 12.9 32.0
Earnings per share is calculated based on the following
data:
Six months Six months Year ended
30 Sept 2013 30 Sept 31 Mar 2013
GBP'000 2012 GBP'000
GBP'000
Profit for the period for basic
and diluted earnings per share 5,077 7,342 18,693
============== =========== =============
30 Sept 2013 30 Sept 31 Mar 2013
Million 2012 Million
Million
Weighted average number of ordinary
shares for the purpose of basic
EPS 58.6 56.8 58.1
Effect of dilutive potential
ordinary shares: share options 0.3 0.3 0.4
Weighted average number of ordinary
shares for the purpose of diluted
EPS 58.9 57.1 58.5
============= ========= ============
6. Acquisitions
On 19 November 2013, Mulberry entered into an agreement to
purchase KJ Saint Honoré SA, a company registered in France for
approximately EUR9 million. This company owns the rights to a lease
for a store on Rue Saint-Honoré, Paris where it is planned to open
a new flagship store during 2014/15. This acquisition is subject to
various conditions being fulfilled by the vendor.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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