Mulberry Group PLC - Trading Statement
March 03 1998 - 3:25AM
UK Regulatory
RNS No 8155p
MULBERRY GROUP PLC
3rd March 1998
Mulberry Group plc
TRADING UPDATE
Further to its trading update of 17 December, 1997 and
announcement of interim results on 12 January, 1998,
Mulberry Group plc ("Mulberry" or "the group"), the AIM-
listed designer and manufacturer of a portfolio of
accessories, ready to wear clothing and interior design
products, regrets to announce that profits before tax for
the year ended 31 March, 1998, will fall significantly
short of current market expectations of #750,000.
This is as a result of reduced sales in the last quarter
to 31 March, 1998, caused by the continued strength of
sterling and the further weakness of key European and Far
Eastern markets. This shortfall is expected to be in the
region of #2.5m. This, combined with action taken to
reduce stocks, will result in a loss of sales and margins
compared to expectations. The Board now expects to
produce a loss before taxation for the year ended 31
March, 1998, of #750,000 at best. This loss is after
exceptional costs of #600,000.
Also in the interim results statement, it was announced
that a number of cost-cutting measures and product line
rationalisations have been implemented since October
which will lead to substantial savings in the next
financial year. This process has been continued further
as follows:
- 28 redundancies announced today, the individuals
drawn from across the group, but mainly from production
and administration, resulting in an additional
exceptional cost of approximately #200,000 for this year,
a figure which has been taken into account in the revised
forecast. This is in addition to the #400,000 previously
advised;
- As a defence against the continued strength of
sterling, the outsourcing of accessories production has
been introduced. All production of small leather goods,
with a sales value of #5 million per annum, is being
removed from the British factories and transferred to
Spain and Italy;
- Similarly, it has been concluded that the costs of
manufacturing handbags in all the group's factories
cannot be sustained. Therefore, Somerton, the smallest
factory, will be closed, with production moved to the
group's other two factories;
- Roger Saul, Chairman and Chief Executive, and
Godfrey Davis, Group Finance Director, have waived their
sole beneficial rights to the interim dividend which was
paid to shareholders on 27 February, 1998, a saving of
#71,000.
Since the announcement of interim results, action has
continued to be taken to reduce stocks, an exercise which
has been successful. Stocks now stand at #8m, down from
a peak of #9.6m, and bank borrowings are reduced from
#8.4m as at 30 September, 1997, to #7.5m.
Mulberry's bankers, Midland Bank plc, are aware of the
current situation and remain supportive.
The final dividend for the full year is expected to be
maintained.
Roger Saul, Mulberry's Chairman and Chief Executive
comments:
"It is bitterly disappointing to announce this news.
However, Mulberry remains in fundamental good health and
has not changed in its resolve to restore shareholder
value. We, like all British exporters, are being
punished by the strength of sterling. Compared to last
year, for every #10 million of export sales, we have lost
#2.5 million. With the actions already taken, we expect
a significant turnaround in fortunes in the next
financial year."
For further information, please contact:
Mulberry Group plc 01749 340 502
Roger Saul, Chairman and Chief Executive
Godfrey Davis, Group Finance Director
Teather & Greenwood 0171 426 9000
Richard Thompson
Ludgate Communications 0171 253 2252
Tim Davis
Sarah Harper
END
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