Mulberry Group PLC Trading Update (1828U)
October 14 2014 - 2:00AM
UK Regulatory
TIDMMUL
RNS Number : 1828U
Mulberry Group PLC
14 October 2014
MULBERRY GROUP PLC ("Mulberry" or the "Group")
TRADING UPDATE
Mulberry Group plc, the English luxury brand, is updating the
market on trading for the six months ended 30 September 2014 and
the outlook for the remainder of the current financial year ending
31 March 2015.
As reported on 12 June 2014, the company anticipated a
challenging year. The first half was expected to be particularly
difficult, with it taking some time for the measures implemented
after the April management change to take effect. Actual trading
conditions have been more difficult than expected, in part due to
the continuing headwinds affecting the luxury sector. Whilst sales
trends have improved as the period progressed, indicating that the
right steps are being taken to restore the business to growth, H1
revenues were down 17% to GBP64.7 million (2013: GBP78.1 million)
and profit before tax for the full year to March 2015 is expected
to be significantly below current expectations.
Retail
The Retail business fell by 9% to GBP45.1 million (2013: GBP49.5
million), with a decline in the UK offset by growth in
International markets:
-- UK full price sales were down GBP2.7 million (-12%) to
GBP20.9 million. Sales have been adversely affected by a decline in
footfall, particularly tourist shoppers;
-- UK outlet sales have continued to normalise from unusually
high levels during the prior year, when discontinued inventories
were being cleared. Outlet sales were down GBP3.0 million (-23%) to
GBP10.1 million;
-- International Retail sales were up GBP1.2 million (+20%) to GBP7.5 million;
-- Online sales were up GBP0.1 million (+1%) to GBP6.6 million,
accounting for 10% of Group sales (2013: 8%).
Wholesale
Wholesale sales declined during H1 by GBP9.0 million (-31%) to
GBP19.6 million. This decline, which has been greater than
anticipated, reflects a combination of inventory reduction and
conservative ordering by our Asian and European franchise
partners.
OUTLOOK
Following the launch of the Tessie bag family during June, we
introduced a new family of bags developed with Cara Delevingne at
the beginning of September. The reaction to these bag families has
been positive and they have contributed to the improving sales
trends. The next new product arrives in-store during November 2014
in time for Christmas, with the launch of the new Blossom tote bag,
the Mini Lily and a new collection of small leather goods.
We expect the wholesale sales pattern to continue for the
remainder of this year before improving during 2015/16 as partner
store sales stabilise and their inventories reduce.
We maintain tight cost control across the business, albeit with
a large proportion of costs remaining fixed. The opening of the
Paris flagship store, planned for late Spring 2015, will mark the
end of a period of accelerated investment in new stores
establishing the foundations for the next phase of growth in both
Europe and North America. This investment has involved significant
capital investment and increased the fixed costs of the business
substantially. Looking forward, the focus will be on growing sales
to generate a return on this investment.
We remain confident that we are taking the right steps to
restore the business to growth. As we have explained, we expect
that the improvement will be progressive over the medium term.
GODFREY DAVIS, EXECUTIVE CHAIRMAN, COMMENTED:
"As I explained in June, my first actions on returning as acting
chief executive focused upon reinforcing our product ranges. I
explained that the impact would be progressive and should produce
benefits over the medium term. The new products are beginning to
reach our shops with the launch of the Cara Delevingne bags at the
beginning of September and with further new product being offered
in our shops during November. As expected, the first half has been
difficult, but the Group remains profitable and cash generative,
giving us the resources to invest for the future. Despite the
current challenges, I remain confident that we will build on
Mulberry's solid foundations and unique brand positioning in the
luxury market to restore growth in the medium term."
Retail Like-for-like sales Retail Total
H1 2014/15 sales
---------------------------------------- -------------
10 weeks to 16 weeks to 26 weeks to 26 weeks to
This year vs. last
year (%) 07-Jun-14 30-Sep-14 30-Sep-14 30-Sep-14
UK full price -12% -13% -12% -12%
UK outlet -24% -26% -25% -23%
UK retail total* -17% -17% -17% -16%
International retail
total* -8% 2% -2% 20%
Online total -7% 3% 1% 1%
Group retail total** -15% -12% -13% -9%
------------ ------------ ------------ -------------
*regional splits exclude online
sales
**Retail total LFL sales for the 10 weeks to 7-Jun-14
were previously reported
The interim results announcement for the six months ended 30
September 2014 is scheduled to be released on 4 December 2014.
FOR FURTHER DETAILS PLEASE CONTACT:
Bell Pottinger
Daniel de Belder / Joanna Boon 07977 927142 / 020 3772 2499
Mulberry Investor Relations
Allegra Perry 020 7605 6795
Altium
Ben Thorne / Katie Hobbs 020 7484 4040
Barclays
Marcus Jackson / Nicola Tennent 020 3134 8370
This information is provided by RNS
The company news service from the London Stock Exchange
END
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