TIDMMUL
RNS Number : 4236J
Mulberry Group PLC
12 June 2014
MULBERRY GROUP PLC ("Mulberry" or the "Group")
PRELIMINARY RESULTS FOR THE YEAR ENDED 31 MARCH 2014
Mulberry Group plc, the English luxury brand, announces its
results for the year ended 31 March 2014.
GODFREY DAVIS, EXECUTIVE CHAIRMAN, COMMENTED:
"Mulberry ended the year to 31 March 2014 in line with the
guidance given in April.
We are taking steps to restore the business to growth by
creating desirable new product across the entire Mulberry range
whilst continuing to invest for the longer term.
We have listened to our customers and are introducing attractive
new products in the key GBP500-800 price range. As a first step we
introduced the new Tessie collection two weeks ago which is proving
popular.
We are proud of having created 320 new manufacturing jobs by
opening our second factory in Somerset during June 2013. With
everyone now in place, we have doubled our UK production capacity
and more than 50% of our handbags are now made in the UK using
traditional skills and craftsmanship.
While the business faces a challenging year, I am confident that
we can build on Mulberry's solid foundations and unique brand
positioning in the luxury market to restore growth in the medium
term."
FINANCIAL HIGHLIGHTS
-- Total sales of GBP163.5 million (2013: GBP165.1 million)
-- Retail sales up 2% to GBP109.0 million, down 3% like-for-like
-- Wholesale sales down 6% to GBP54.5 million
-- Profit before tax of GBP14.0 million (2013: GBP26.0 million),
reflecting the increase in costs associated with new stores opened
this year and last year (GBP4.8 million) as well as GBP3.4 million
of exceptional, non-recurring costs as previously announced
-- Basic earnings per share of 14.5p (2013: 32.2p)
-- Proposed dividend of 5.0p per share (2013: 5.0p per share)
OPERATING HIGHLIGHTS
-- Construction of second UK factory completed during June 2013, with 320 new jobs created
-- Nine new international stores opened, two closed
-- Commenced the implementation of new supply chain management
system which will allow us to forecast demand and allocate
production more effectively as well as improve inventory
management
CURRENT TRADING AND OUTLOOK
-- Product range rebalanced following management changes during March 2014
-- During the 10 weeks to 7 June 2014, total Retail sales were
9% below the same period last year (like-for-like sales down
15%)
-- Launch of the new Tessie collection has been well received
-- Double digit decline in Wholesale sales expected for 2014/15
-- Acquisition of new Paris flagship store; due to open during early 2015/16
FOR FURTHER DETAILS PLEASE CONTACT:
Bell Pottinger
Daniel de Belder / Kashara
Taylor 020 7861 3232 / 07977 927142
Mulberry Investor Relations
Allegra Perry 020 7605 6795
Altium
Ben Thorne / Katie Hobbs 020 7484 4040
Barclays
Marcus Jackson / Nicola
Tennent 020 3134 8370
BUSINESS REVIEW
Total revenue for the year to 31 March 2014 was GBP163.5
million, down 1% from GBP165.1 million last year, reflecting growth
in Retail sales offset by a decline in Wholesale sales.
Retail
The Retail business grew by 2% to GBP109.0 million (2013:
GBP107.2 million), driven by new store openings with like-for-like
sales down 3%.
-- UK Retail sales were unchanged at GBP91.9 million (2013:
GBP91.8 million), reflecting a decline in full price stores offset
by significant growth in outlet;
-- International Retail sales were up 11% to GBP17.1 million (2013: GBP15.4 million);
-- Online sales, which are included in UK and International
Retail sales, were down 11% to GBP15.6 million, accounting for 10%
of Group sales (2013: 11%); and
-- During the year we opened seven new directly operated stores
in the USA, Austria, Germany and Canada.
Wholesale
Wholesale sales were down 6% to GBP54.5 million (2013: GBP57.9
million), reflecting slower UK and Asian sales.
During the year we opened two partner stores (one in Europe, one
in Asia) and closed two partner stores in Korea and the Middle
East.
Financial
Gross margin was 63.3% for the year to 31 March 2014, in line
with the prior year (2013: 63.3%).
Net operating expenses for the period increased by GBP10.7
million to GBP89.7 million (2013: GBP79.0 million). This includes
GBP4.8 million additional costs related to new directly operated
international stores opened during this year and the previous year
as well as GBP3.4 million of non-recurring costs relating to the
impairment of two US stores and to the recent management
change.
Due to the continued investment in directly operated
international stores both this year and last year and the
non-recurring items identified above, profit before tax fell 45% to
GBP14.0 million (2013: GBP26.0 million).
The Group had an effective tax rate of 38.6% for the year (2013:
28.2%) resulting in a tax charge of GBP5.4 million (2013: GBP7.3
million). The effective rate has risen due to losses arising in the
new Canadian and European businesses where a deferred tax asset has
not been established.
Capital expenditure for the period was GBP15.5 million, of which
GBP8.1 million related to stores, GBP4.4 million to factories and
GBP2.8 million to investment in IT systems.
Inventories have decreased to GBP33.8 million from GBP35.7
million at the start of the period reflecting effective purchasing
and stock management. Overall, the Group balance sheet remains
strong with cash of GBP23.4 million at 31 March 2014 (2013: GBP21.9
million) and no debt.
Basic earnings per share for the year decreased to 14.5p (2013:
32.2p).
The Board is recommending the payment of a dividend on the
ordinary shares of 5.0p per ordinary share (2013: 5.0p) which will
be paid on 10 September 2014 to shareholders on the register on 15
August 2014.
STRATEGY
The long term strategy remains to grow Mulberry as an
international luxury brand and we are confident that we can grow
sales and profits in the medium term. We are taking the following
key steps to achieve this:
1. Re-focus the product offering:
The new handbag offering introduced over the last two seasons
has focused on bags priced above GBP1,000, but has lacked new and
interesting products in the key price range of GBP500 to GBP800.
The design team will ensure that they deliver attractive new
product within this key price range while continuing to refresh the
collections across our full price spectrum. The benefit of this
will be progressive.
2. Stores:
We have invested in the growth of the Mulberry store network
over the last three years and will continue to invest in the
current financial year. Due to the major investment in the Paris
flagship store, which is expected to open at the beginning of the
next financial year, we will open fewer stores in the current
financial year and take the opportunity to focus on improving the
productivity of existing stores.
3. Supply chain:
Continued investment in supply chain management is enabling us
to build a scalable platform for the business. We are on track to
complete the implementation of a new integrated supply chain
management system during the course of the current financial year;
this will allow us to forecast demand and allocate production more
effectively as well as improving inventory management.
CURRENT TRADING AND OUTLOOK
During the 10 weeks to 7 June 2014, total Retail sales were 9%
below the same period last year (like-for-like sales down 15%).
The outlook for the current financial year remains challenging.
Although there are encouraging signs in our own full price Retail
business, including the well-received launch of the new Tessie
collection, we expect the improvement in sales will be progressive.
Following effective stock clearance during 2013/14, outlet sales
have settled at more normal levels this year. The new Spring Summer
15 collection has been well-received by our Wholesale customers but
this channel will take longer to recover and we expect there to be
a double digit decline for the year as a whole.
We remain committed to our strategy of international expansion
and traction has been gained in new markets in recent years through
the opening of high quality stores. For 2014/15 we plan to open
five new directly operated stores and fit out the Paris flagship
store which we plan to open at the beginning of the next financial
year.
There will be some effect on gross margin during the year from
our second factory in Somerset, which is still building up to full
production capacity.
Capital expenditure for the year to 31 March 2015 is expected to
be approximately GBP18.0 million, of which GBP14.6 million will be
on stores (2014: GBP15.5 million, GBP8.1 million on stores),
subject to the timing of new store openings and other investments.
This includes a significant investment in a Paris flagship store
which will be an important step for the brand. The Group is
expected to continue to generate sufficient cash from operations to
fund its investment programme.
Notwithstanding the short-term pressures, we are confident that
we can build on Mulberry's solid foundations and unique brand
positioning in the luxury market to restore growth in the medium
term.
Consolidated income statement
Year ended 31 March 2014
Note 2014 2013
GBP'000 GBP'000
Revenue 163,456 165,130
Cost of sales (59,992) (60,623)
Gross profit 103,464 104,507
Other operating expenses (86,806) (79,413)
Exceptional operating expenses 3 (3,388) -
-------------------------------- ----- --------- ---------
Operating expenses (90,194) (79,413)
Other operating income 447 437
Operating profit 13,717 25,531
Share of results of associates 292 477
Finance income 35 48
Finance expense (30) (30)
Profit before tax 14,014 26,026
Tax (5,412) (7,333)
Profit for the year 8,602 18,693
========= =========
Attributable to:
Equity holders of the parent 8,602 18,693
========= =========
Basic earnings per share 5 14.5p 32.2p
Diluted earnings per share 5 14.3p 32.0p
Reconciliation of adjusted profit before tax:
Note 2014 2013
GBP'000 GBP'000
Profit before tax 14,014 26,026
Exceptional items:
Impairment relating to retail 2,740 -
assets
Net non-recurring Director 648 -
costs
Adjusted profit before tax -
non-GAAP measure 17,402 26,026
========= =========
Adjusted earnings per share
- non-GAAP measure
Basic earnings per share 5 19.8p 32.2p
Diluted earnings per share 5 19.6p 32.0p
Consolidated statement of comprehensive income
Year ended 31 March 2014
2014 2013
GBP'000 GBP'000
Profit for the year 8,602 18,693
Items that may be reclassified
subsequently to profit or loss
Exchange differences on translation
of foreign operations (981) 215
Tax impact arising on above
exchange differences 545 (170)
--------- ---------
Total comprehensive income for
the year 8,166 18,738
========= =========
Attributable to:
Equity holders of the parent 8,166 18,738
========= =========
Consolidated balance sheet
At 31 March 2014
2014 2013
GBP'000 GBP'000
Non-current assets
Intangible assets 7,323 5,740
Property, plant and equipment 35,139 33,494
Interests in associates 64 281
Deferred tax assets 770 201
---------
43,296 39,716
Current assets
Inventories 33,780 35,698
Trade and other receivables 13,574 14,233
Cash and cash equivalents 23,414 21,858
---------
70,768 71,789
Total assets 114,064 111,505
--------- ---------
Current liabilities
Trade and other payables (29,423) (29,800)
Current tax liabilities (683) (2,996)
---------
(30,106) (32,796)
--------- ---------
Total liabilities (30,106) (32,796)
--------- ---------
Net assets 83,958 78,709
========= =========
Equity
Share capital 3,000 2,992
Share premium account 11,961 11,835
Own share reserve (1,676) (2,937)
Capital redemption reserve 154 154
Special reserves 1,467 1,467
Foreign exchange reserve (212) 224
Retained earnings 69,264 64,974
Total equity 83,958 78,709
========= =========
Consolidated statement of changes in equity
Year ended 31 March 2014
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 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
Total comprehensive
(expense)
/ income for
the year - - - - - (436) 8,602 8,166
Charge for
employee share-based
payments - - - - - - 81 81
Exercise of
share options 8 126 - - - - (1,461) (1,327)
Own shares - - 1,261 - - - - 1,261
Ordinary dividends
paid - - - - - - (2,932) (2,932)
As at 31 March
2014 3,000 11,961 (1,676) 154 1,467 (212) 69,264 83,958
========== ========= ========= ========== ========== ========== =========== ========
Consolidated cash flow statement
Year ended 31 March 2014
2014 2013
GBP'000 GBP'000
Operating profit for the year 13,717 25,531
Adjustments for:
Depreciation and impairment of
property, plant and equipment 9,870 5,553
Amortisation of intangible assets 1,428 803
Profit on disposal of property,
plant and equipment (13) (26)
Effects of foreign exchange (40) (270)
Share-based payments charge 127 1,011
Operating cash flows before movements
in working capital 25,089 32,602
Decrease/(increase) in inventories 1,931 (3,101)
Decrease in receivables 558 533
Decrease in payables (377) (5,657)
Cash generated from operations 27,201 24,377
Corporation taxes paid (7,749) (10,922)
Interest paid (30) (30)
Net cash inflow from operating
activities 19,422 13,425
--------- ---------
Investing activities:
Interest received 35 49
Dividend received from associate 441 518
Purchases of property, plant and
equipment (13,199) (13,976)
Proceeds from disposal of property,
plant and equipment 44 37
Acquisition of intangible fixed
assets (3,023) (2,108)
Net cash used in investing activities (15,702) (15,480)
--------- ---------
Financing activities:
Dividends paid (2,932) (2,906)
Proceeds on issue of shares - 1
Settlement of share awards (493) (1,504)
Disposal of own shares 1,261 1,029
Net cash used in financing activities (2,164) (3,380)
--------- ---------
Net increase/(decrease) in cash
and cash equivalents 1,556 (5,435)
Cash and cash equivalents at beginning
of year 21,858 27,293
Cash and cash equivalents at end
of year 23,414 21,858
========= =========
Notes
1. Basis of preparation
The financial information in this announcement, which was
approved by the Board of Directors on 11 June 2014, does not
constitute the Company's statutory accounts for the years ended 31
March 2014 or 2013, but is derived from those accounts.
Statutory accounts for the year ended 31 March 2013 have been
delivered to the Registrar of Companies and those for the year
ended 31 March 2014 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
2014 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 2014, the financial year runs for
the 52 weeks to 29 March 2014 (2013: 53 weeks ended 30 March
2013).
During the current year the following new and revised Standards
and Interpretations have been adopted but have not had an impact on
the Group:
-- 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
-- IAS 36: Impairment of Assets
-- 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
At the date of approval 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 12: Disclosure of Interests in Other 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 the Group has in other entities.
Beyond the information above, it is not practicable to provide a
reasonable estimate of the effect of these Standards until a
detailed review has been completed.
3. Exceptional expenses
The exceptional operating expenses for the year include:
-- An impairment charge of GBP2.7 million relating to the retail
assets of two stores on Spring Street, New York, and Short Hills,
New Jersey. Neither location has traded in line with their expected
potential; and
-- Net non-recurring Director costs associated with the
settlement agreed with Bruno Guillon following his resignation from
the Company. This includes GBP0.8 million for compensation and
payment in lieu of notice, GBP0.1 million relating to social
security costs and a credit of GBP0.3 million from the forfeiture
of his share awards.
There were no exceptional income or expenses in the prior
year.
4. Dividends
The dividends approved and paid during the year are as
follows:
2014 2013
GBP'000 GBP'000
Dividend for the year ended 31 March
2013 of 5p (2012: 5p) per share
paid in September 2013 2,932 2,906
--------- ---------
Proposed dividend for the year ended
31 March 2014 of 5p per share (2013:
5p) 3,000 2,992
--------- ---------
The 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.
5. Earnings per share ('EPS')
2014 2013
pence pence
Basic earnings per share 14.5 32.2
Diluted earnings per share 14.3 32.0
Adjusted basic earnings per
share 19.8 32.2
Adjusted diluted earnings per
share 19.6 32.0
Earnings per share is calculated based on the following
data:
2014 2013
GBP'000 GBP'000
Profit for the year for basic
and diluted earnings per share 8,602 18,693
Adjustments to exclude exceptional
items:
Impairment relating to retail 2,740 -
assets
Net non-recurring Director costs 648 -
Tax impact of above (216) -
--------- ---------
Adjusted profit for the year
for basic and diluted earnings
per share 11,774 18,693
--------- ---------
Earnings per share is calculated based on the following
data:
2014 2013
million million
Weighted average number of ordinary
shares for the purpose of basic
EPS 59.4 58.1
Effect of dilutive potential ordinary
shares: share options 0.8 0.4
---------- ---------
Weighted average number of ordinary
shares for the purpose of diluted
EPS 60.2 58.5
---------- ---------
The weighted average number of ordinary shares in issue during
the year excludes those held by the Mulberry Group Plc Employee
Share Trust.
6. Acquisitions and subsequent events
On 19 November 2013, the Group 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 in 2015. This acquisition is subject to
various conditions being fulfilled by the vendor. These are due to
be completed at the end of June 2014. The acquisition will be
undertaken by Mulberry Company (France) SARL. Included within other
debtors at the year end is a deposit of GBP0.7 million paid in
relation to this acquisition.
7. 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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