Source - LSE Regulatory
RNS Number : 3310T
Mulberry Group PLC
24 November 2021
 

Mulberry Group plc

Results for the twenty-six weeks ended 25 September 2021

 

Further strategic progress amid strong consumer demand

 

Mulberry Group plc (the "Group" or "Mulberry"), the British sustainable luxury brand, announces unaudited results for the twenty-six weeks ended 25 September 2021 (the "period").

 

THIERRY ANDRETTA, CHIEF EXECUTIVE OFFICER, COMMENTED:

 

"I am proud of Mulberry's performance during the period. Our long-term strategy, namely our innovative and sustainable products made in our carbon neutral Somerset factories, our market-leading omni-channel distribution model, and our expansion into Asia Pacific, has delivered a strong financial performance.

 

"Product innovation and sustainability are central to our strategy, demonstrated by the recent launch of our "The Lowest Carbon collection", further supporting the commitments we made in our Made to Last manifesto and our goal to reach zero carbon emissions by 2035.

 

"The bold decisions we have taken with regards to focussing on our UK production capabilities, means that we are well placed for the festive trading period and beyond. Finally, I would like to take this opportunity to thank my colleagues for their hard work, commitment and achievement over the period."

 

 

Financial Highlights

·      Group revenue increased 34% to £65.7m (2020: £48.9m)

·      Profit before tax of £10.2m (2020: loss before tax £2.4m) includes a one-off profit on disposal of Paris lease of £5.7m

·      Gross margin of 69% (2020: 59%) due to a strategic focus on full-price sales and increased volume efficiencies

·      UK retail sales increased 36% to £38.0m (2020: £28.0m)

·    China retail sales increased 38%, which contributed to the 23% increase in Asia Pacific retail sales to £11.8m (2020: £9.5m), reflecting ongoing investment in the region

·      US retail sales increased 57% to £3.3m (2020: £2.1m)

·      International retail sales represented 40% of Group revenue (2020: 41%)

·      Franchise and wholesale sales increased 67% to £10.1m (2020: £6.0m)

·      Strong period end net cash of £30.3m (2020: £8.6m) and deferred liabilities of £5.0m (2020: £4.6m)

 

Operating Highlights

·      Business and infrastructure responded well to increased demand following easing of COVID-19 restrictions

·    Digital sales 29% of Group revenue in the period, lower than last year when stores were closed but up from 20% (H1 2019), reflecting the ongoing strength of this channel

 

 Sustainability Highlights

·      Launched on 22 November 2021, "The Lowest Carbon collection", crafted from the world's lowest carbon leather and using a local and transparent supply chain. This is Mulberry's first capsule collection of regenerative "farm to finished product", further supporting our Made to Last manifesto

·     Continue to focus on embedding sustainability and circularity across the entire business, following the launch of the Made to Last manifesto in April 2021

·      Successful launch of our resale programme "Preloved Bags", across all channels

·      Further investment in the Lifetime Service Centre at The Rookery which is now restoring more than 10,000 bags a year

·      Committed to set Science Based Targets aligned with our 2035 Net Zero emissions target

·      86% of the collection now uses leather and suede sourced from environmentally accredited tanneries; on track to increase to 100% by Autumn/Winter 2022. All other non-leather materials are fully sustainable

·      Collaborations with contemporary British Designers emphasising sustainable techniques and materials

 

 Current Trading

·      Retail revenue in the 8 weeks to 20 November 2021 increased 35% compared to the same period last year

·     Gross margin in the second half is expected to be similar to, or slightly higher than, the 67% achieved in the second half of last year

·     The Group is expected to continue generating cash from operations in the second half and, with its deferred liabilities expected to unwind, the Group will maintain a strong cash position at the year end

 

 

 

 

 

 

 

 

 

FOR FURTHER DETAILS PLEASE CONTACT:

Mulberry

Charles Anderson                                                                    Tel: +44 (0) 20 7605 6793

 

Headland (Public Relations)

Lucy Legh / KIRSTY CARRUTHERS                                            Tel: +44 (0) 20 3805 4822

mulberry@headlandconsultancy.com 

GCA Altium Limited (FINANCIAL ADVISER AND NOMAD)

Tim Richardson                                                                         Tel: +44 (0) 20 7484 4040

 

 

 

 

OVERVIEW

 

The Group has delivered a strong performance. Group revenue increased by 34%, returning to pre-COVID-19 levels and profit before tax was £10.2m (2020: loss of £2.4m), which included a profit of £5.7m on the lease in Paris. The underlying profit before tax of £4.5m (2020: loss before tax of £1.9m) and financial strength of the Group reflects the benefits of the actions we took during the pandemic and a strong consumer reaction to the Group's product.

 

Sales in the UK recovered strongly once our stores re-opened. The sales lost from the absence of tourists in the UK and the rationalisation of stores in Europe were replaced by strong growth in Asia.

 

Gross margin increased to 69% (2020: 59%) driven by a strategic focus on full-price sales and increased volume efficiencies.

 

The combination of our UK factories, careful planning and agile supply chains has enabled us to successfully navigate the well-publicised difficulties in global logistics, with no impact on fulfilment to our sales channels.

 

We ended the period with net cash of £30.3m (2020: £8.6m) and deferred liabilities of £5.0m (2020: £4.6m).

 

Looking ahead, our mission continues to be focused on becoming the leading responsible British luxury brand and a pioneer in sustainability. Through our Made to Last manifesto, launched in April, we are committed to transform our business to be a regenerative and circular model that will encompass the entire supply chain, from field to wardrobe by 2030. We believe the opportunity is substantial and we have taken a progressive leadership position in this space, investing in products that are made to last, and offering customers circular repair and buy back options through the Mulberry Exchange.

 

Mulberry's results demonstrate the continued relevance and popularity of the brand and show ongoing progress against both financial and operational goals.

 

CURRENT TRADING AND OUTLOOK

 

The underlying sales trends experienced in the first half continued into October and November with improving store sales, a strong digital performance and continuing growth in Asia. The comparative period in the prior year was affected by sporadic closures and lockdowns which make direct comparisons difficult but, subject to unforeseen events, sales are expected to continue to grow in the second half. Retail revenue in the 8 weeks to 20 November increased 35% compared to the same period last year.

 

Gross margin in the second half is expected to be similar to, or slightly higher than, the 67% achieved in the second half last year.

 

The Lowest Carbon collection, crafted from the world's lowest carbon leather and using a local and transparent supply chain, launched on 22 November 2021. This is Mulberry's first capsule collection of regenerative "farm to finished product", further supporting our Made to Last manifesto. This collection represents the future of the business as we continue to build a network of regenerative and organic farms to supply the hides to create our leather across the UK and Europe. The capsule was also featured at the recent G20 Summit in Rome.

 

In view of the strong performance in the first half and the Group's substantial cash reserves, a progressive increase in marketing expenditure is planned in the second half to continue building brand awareness worldwide.

 

Projects are in place to move the Group's legacy systems forward, and to develop the next generation of digital and omni-channel platforms. This is expected to lead to increased capital expenditure next year and beyond.

 

The Group is expected to continue generating cash in the second half and with the deferred liabilities expected to unwind, the Group will maintain a strong cash position at the year end.

 

It should be noted that the outlook continues to be subject to a degree of uncertainty as the important festive period commences. The Group's performance would undoubtedly be negatively affected by any further countrywide lockdowns or a further wave of COVID-19.

FINANCIAL REVIEW

 

Group revenue and gross profit

 

By 12 April 2021, all our stores worldwide were reopened following a second wave of global lockdowns due to COVID-19.

 

Sales analysis for the 26 weeks to 25 September 2021 compared to the same period last year is as follows:

 

 

 

2021

£'m

 

2020

£'m

 

 

% Change

 

 

Digital

19.1

 

23.4

 

-19%

Stores

36.5

 

19.5

 

+87%

Retail (omni-channel)

55.6

 

42.9

 

+30%

Franchise and wholesale

10.1

 

6.0

 

+67%

Group revenue

65.7

 

48.9

 

+34%

 

 

 

 

 

 

 

Digital

14.2

 

18.0

 

-21%

Stores

23.8

 

10.0

 

+139%

Omni-channel - UK

38.0

 

28.0

 

+36%

 

 

 

 

 

 

Digital

2.2

 

1.7

 

+30%

Stores

9.6

 

7.9

 

+22%

Omni-channel - Asia Pacific

11.8

 

9.5

 

+23%

 

 

 

 

 

 

Digital

2.7

 

3.7

 

-28%

Stores

3.1

 

1.7

 

+82%

Omni-channel - Rest of world

5.8

 

5.4

 

+7%

Total Retail (omni-channel)

55.6

 

42.9

 

+30%

 

 

 

 

Q1

 

Q2

 

H1 2021

 

£'m

Sales

% Change

 

£'m

Sales

% Change

 

£'m

Sales

% Change

 

 

 

 

 

 

 

 

 

Digital

9.3

-36%

 

9.8

+11%

 

19.1

-18%

Stores

16.6

+202%

 

19.9

+42%

 

36.5

     +87%

Retail (omni-channel)

25.9

+29%

 

29.7

+30%

 

55.6

+30%

Franchise and wholesale

6.4

+276%

 

3.7

-14%

 

10.1

+68%

Group revenue

32.3

+48%

 

33.4

+23%

 

65.7

+34%

 

 

Group revenue increased by 34% and was 3% above the same period in 2019 (pre COVID-19) on a comparable basis (adjusting for store openings and closures). In the UK, total retail sales recovered strongly and were 7% above the same period in 2019 on a comparable basis. UK digital sales declined by 21% as stores re-opened, but represented 37% of UK retail sales, compared to 26% in 2019, reflecting the accelerated shift to digital and omni-channel shopping.

 

China sales increased 38%, which contributed to the 23% increase in Asia Pacific, driven by ongoing investment in the region. China digital sales represented 43% of China retail sales.

 

Franchise and wholesale sales increased by 67% as our Franchise partners benefited from the post COVID-19 recovery and increased demand following the easing of restrictions.

 

Gross margin increased to 69% (2020: 59%) driven by a strategic focus on full-price sales and increased volume efficiencies.

 

Other operating expenses

 

Other operating expenses in the period increased by 11.7% to £40.0m (2020: £35.8m) due to further marketing spend to support international growth and additional revenue related costs. The Group continued to benefit from the business rates relief, albeit at a lower level than in the previous year.

 

Following the cost actions taken in response to COVID-19, the Group is managing its cost base in line with anticipated trading levels.

 

Other operating income

 

Included within other operating income in the period is £nil (26 weeks ended 26 September 2020: £4.1m and 52 weeks ended 27 March 2021 £4.9m) of grants receivable under the Coronavirus Job Retention Scheme (CJRS). The Group decided not to utilise the CJRS in the period due to the strong trading performance.

 

Profit before tax

 

The Group's reported profit before tax for the period was £10.2m (2020: loss before tax of £2.3m), which included a one-off profit of £5.7m on the early termination and the exit of a lease in Paris. The Group's underlying profit before tax was £4.5m (2020: loss before tax of £1.9m).

 

See note 2 for further details of Alternative Performance Measures.

 

Taxation

 

The Group reported a tax charge for the period of £2.9m (2020: £0.3m) which includes a £2.4m charge on the profit on the disposal of an intangible lease asset, in respect of the early termination of the Paris lease. The effective tax rate is 14% (2020: 14%) on underlying profit and is lower than the UK tax rate for the period of 19% primarily due to the use of brought forward tax losses and not recognising deferred tax assets on the Group's accumulated tax losses.

 

Balance Sheet

 

Intangible assets decreased by £8.6m to £6.4m (2020: £15.0m) predominantly due to the early termination of the Paris lease. Right-of-use assets decreased by £8.3m to £34.6m (2020: £42.9m) due to an impairment charge against right-of-use assets recorded in the 26 weeks to 27 March 2021.

 

Net working capital, which comprises inventories, trade and other receivables and trade and other payables decreased by £2.0m to £19.4m (2020: £21.4m). This was mainly due to the decrease in inventories, as we continue to manage our inventory position, and the increase in debtors and creditors due to increased volume. There has been a slight increase in inventories since 27 March 2021 with increased inventories of raw materials to protect the Group from supply chain delays, balanced by reduced finished goods as the agile supply chain systems continue to deliver results.

 

The reduction in lease liabilities (current and non-current) by £17.3m to £70.9m (2020: £88.2m) is primarily due to the renegotiation and termination of certain leases.

 

Cash flow

 

The net increase in cash and cash equivalents per the cash flow statement of £18.5m (2020: £0.6m) mainly reflected the strong financial performance in the period and the net proceeds from the early termination of the Paris lease, slightly offset by higher capital expenditure in Asia Pacific.

 

The profit and proceeds from the disposal of intangibles of £5.4m and £13.3m respectively relate to the early termination of the Paris lease.

 

Borrowing facilities

 

The Group had no bank borrowings at 25 September 2021. The borrowings shown in the balance sheet are loans from minority shareholders in the Chinese and Japanese subsidiaries.

 

The Group's net cash balance (cash and cash equivalents less overdrafts) at 25 September 2021 was £30.3m (2020: £8.6m). Net cash comprises cash balances of £30.3m (2020: £8.6m).

 

During the period the Group extended its secured revolving credit facility (RCF) with HSBC until March 2023, and renegotiated covenants to reflect the ongoing COVID-19 environment. The RCF covenants are tested quarterly on a "frozen GAAP" basis (excluding the impact of IFRS 16) and contain a net debt to EBITDA ratio, and a fixed charge cover ratio. The RCF was undrawn during the period, and we do not anticipate drawing on the facility in the second half.

 

In addition, the Group has a £4.0m overdraft facility which is renewed annually.

 

Going concern

 

The Group has continued to trade significantly ahead of the Directors' original base case forecasts with a cash position materially ahead of assumptions, enhanced by the net proceeds from the early termination of a lease in Paris, announced on 6 July 2021. As a result, the Directors remain confident that despite the current uncertainties, the Group has the financial resources to enable it to continue to operate as a going concern for the foreseeable future.

 

 

 

PROGRESS AGAINST OUR STRATEGY

 

With our rich heritage in leather craftmanship and reputation for innovation, we strive to grow the Group through our four strategic pillars which focus on omni-channel distribution, international development, constant innovation, and a sustainable lifecycle.

 

Strategic pillar 1 - Omni-channel distribution

 

Our omni-channel distribution model is designed to allow customers to research, buy and return product anywhere across our stores and digital platforms.

 

We aim to enhance our customers' experience and drive engagement, and this includes developing our store network through selective store openings and closures, the continued roll-out of the new Mulberry store concept and further enhancements to our digital network.

 

Most of our retail stores were open by 12 April 2021 and except for some localised restrictions, trade was uninterrupted in the first half of the year. UK retail sales also benefited from the development of our omni-channel distribution, providing the customer with a single view of inventory, which helped to drive a stronger full price sales mix.

 

Virtual and in-store appointments continue to play an important part in the customer journey, even after the stores reopened, representing 8% of all UK store sales and resulting in an increased average transaction value (compared to store walk-ins).

 

Digital sales represented 29% of Group revenue, which demonstrates the accelerated shift to digital and omni-channel shopping across all regions. In Asia Pacific, digital sales grew to 19% of the region's sales, supported by local fulfilment in Japan and the development of strategic partnerships, including T-Mall in China. China digital sales grew 22% and represented 43% of total China sales. On 15 July 2021 we also launched a We Chat programme in China, which coincided with the Alexa x Alexa launch. This is a long-term programme with the aim of building brand awareness in the region, with content regularly updated and tailored to relevant campaigns, products, and customers.

 

We have continued to refine the retail network. Our store network closed the period with 113 points of sale inclusive of retail and franchise. This included the opening of 7 doors internationally 6 in our new store concept. There were 7 closures in the same period, including the early exit of our Paris store. In the UK we operated 45 retail stores[1] at the period end (2020: 45), which included 12 John Lewis and 7 House of Fraser concessions. We will continue to manage the business proactively and focus on optimising the store network.

 

[1] Store numbers include own stores and concessions operated by Mulberry employees

 

Strategic pillar 2 - International development

 

We are optimising our digital channels and global store network, with a particular focus on Asia Pacific, which continues to offer significant growth opportunities.

 

Asia Pacific retail sales increased by 23%, driven by ongoing investment in the region, with China retail sales up 38%, South Korea retail sales up 7% and Japan retail sales up 54%. Retail sales in South Korea and Japan were disrupted to some extent by regional and local lockdowns in the period. In Asia Pacific we operated 38 retail stores at the period end (2020: 34). During the period we opened 4 retail stores in China in Beijing (2), Chengdu and Wuhan and 2 retail stores in South Korea, which included our new store concept. This features design elements that represent our distinctive British heritage and enables us to better display and promote our collections. The concept includes innovative customer-facing technology, creates more space and supports our omni-channel proposition. It has helped to elevate our brand position with the new concept stores outperforming more traditional outlets.

 

As stated above, the 4 stores opened in China were Beijing World Financial Centre, Beijing Shin Kong Place and Wuhan Heartland 66, along with a pop-up in Chengdu International Finance Square. A further opening in Shanghai International Finance Centre is due to open in November 2021.

 

The investment in the Group's subsidiaries supported the overall growth, with China and South Korea making further progress in the period. Higher sell throughs and reduced mark down periods also contributed to this success as well as better positioning for the brand.

 

Our global pricing strategy, which sets retail prices in all markets and currencies at the same level, is a competitive difference giving our customers the confidence to shop the brand in their home markets. 

 

During the period it was agreed to terminate the lease of our Paris store which closed on 24 July 2021. We plan to open a new store in Paris once international tourism returns in a location which supports the Company's omni-channel approach and optimises its customer centric retail experience.

 

Strategic pillar 3 - Constant innovation

 

We continue to innovate with new services, new materials and methods of creation and production to adapt to changing customer tastes and meet demand. At the same time, we are transforming our agile supply chain, enhancing market reactivity, and reducing lead time, to match the increase in digital demand.

 

In September, we launched the Sadie family, a timeless satchel with the new Typography lock, and the Billie family, a youthful crossbody slouchy silhouette. Both families are crafted from leather sourced from our partner tanneries with positive environmental credentials and Leather Working Group ratings.

 

We have continued our 50th anniversary celebrations through a series of joyful collaborations with three of the most visionary designers of their generation - Priya Ahluwalia, Richard Malone and Nicholas Daley. Each designer has created a capsule collection as part of Mulberry Editions, a new offering of limited-edition accessories that have been delivered throughout 2021. Crafted entirely from surplus fabrics and leather, the Mulberry x Ahluwalia collection heroes the Portobello Tote silhouette, which was our first 100% sustainable leather bag, launched in 2019. The Richard Malone capsule sees the Irish designer reinvent the iconic Bayswater with his signature authenticity, resourcefulness, sustainability, and experimentation. This Bayswater updates the silhouette's timeless detailing and is crafted with our sustainable Eco-Scotchgrain, made from recombined bio-plastic materials, and embossed with a distinctive pebble grain finish. The Nicholas Daley capsule will launch in January 2022.

 

Strategic pillar 4 - Sustainable lifecycle

 

Mulberry products have been Made to Last from the outset and we are committed to lifetime service for a Mulberry item. In April 2021 we launched our Made to Last manifesto, which sets us apart from our competition. We are committed to transform our business to be a regenerative and circular model that will encompass the entire supply chain, from field to wardrobe by 2030.

 

We launched Mulberry Exchange in February 2020, our circular buy-back and re-sale programme. This was further extended in April 2021 through the digital launch of the Mulberry Exchange programme on Mulberry.com. Through the Mulberry Exchange programme, we buy back bags from customers who are ready for a change, repair and restore them in our Lifetime Service Centre at The Rookery, and list them through one of our resale channels. Any bags which are not fit for repair are sent for energy reclamation at our strategic partner, Scottish Leather Group, powering the production of new leather to make the next Mulberry bags.

 

In July, Mulberry committed to setting Science Based Targets, and joined a group of over 650 global businesses working to hold temperature rise to 1.5°C above pre-industrial levels. Mulberry's listing as "committed" is just the first step on our journey towards our aim of achieving Net Zero emissions by 2035.

 

86% of the collection now uses leather and suede sourced from environmentally accredited tanneries; expected to increase to 100% by Autumn/Winter 2022. All other non-leather materials are fully sustainable.

 

Marketing and brand

 

To mark our 50th anniversary year, Mulberry announced the launch of the Made to Last manifesto, laying out an ambitious commitment to transform the business to a regenerative and circular model, encompassing the entire supply chain, from field to wardrobe by 2030. The 360-campaign kicked off with a livestreamed launch event (due to Covid restrictions), featured a series of global brand advocates in the sustainability sphere and was supported by a global media plan featuring the manifesto. May 2021 saw the launch of The Mulberry Exchange on Mulberry.com; to support this we partnered with Dazed on a Tik Tok focussed activation, commissioning a series of up-and-coming Tik Tok stars to style a selection of our pre-loved bags.

 

As mentioned above, to support our collaborations with designers Priya Ahluwalia, Richard Malone and Alexa Chung, we held a series of events to promote these visionary designers and their collections globally. A highlight of these was an event at the V&A in September's London fashion week to showcase Malone's eco-friendly version of our timeless Bayswater bag using Eco-Scotchgrain and leather from gold standard, environmentally accredited tanneries.

 

We continued our focus on building relationships in the digital marketing space, with new and existing digital media partners and third-party affiliates to reach younger audiences and drive new customer growth on our digital platforms. Our designer collaborations across the year were aligned to reach these younger, fashion forward audiences, with Alexa x Alexa being the peak of this in July. The success of Alexa x Alexa also ran into August with additional spend and placements booked to continue the strong performance seen here.

 

 

 

 

CONSOLIDATED INCOME STATEMENT

26 WEEKS ENDED 25 september 2021

 

Note

 

Unaudited

26 weeks ended

25 September 2021 £'000

 

Unaudited

26 weeks ended

26 September 2020 £'000

 

Audited

52 weeks ended 27 March 2021

£'000

 

 

 

 

 

Revenue

 

65,719

48,919

114,951

Cost of sales

 

(20,326)

(20,019)

(41,879)

 

 

 

 

 

Gross profit

 

45,393

28,900

73,072

 

 

 

 

 

Impairment charge related to property, plant and equipment

 

-

-

(590)

Impairment charge related to right-of-use assets

 

-

-

(5,725)

Store closure credit (1)

 

5,700

1,992

3,702

Lease modification

 

-

 

3,951

Other operating expenses

 

(39,960)

(35,785)

(71,638)

Other operating income (2)

 

779

4,691

6,006

 

 

 

 

 

Operating profit/(loss)

 

11,912

(202)

8,778

 

 

 

 

 

Share of results of associates

 

61

(32)

(60)

Finance income

 

8

3

12

Finance expense

 

(1,769)

(2,121)

(4,176)

 

 

 

 

 

Profit/(loss) before tax

 

10,212

(2,352)

4,554

 

 

 

 

 

Tax (charge)/credit

4

(2,929)

330

43

 

 

 

 

 

Profit/(loss) for the period

 

7,283

(2,022)

4,597

 

 

 

 

 

Attributable to:

 

 

 

 

Equity holders of the parent

 

7,568

(1,713)

4,773

Non-controlling interests

 

(285)

(309)

(176)

Profit/(loss) for the period

 

7,283

(2,022)

4,597

 

 

 

 

 

Basic profit/(loss) per share

5

12.2p

(3.4p)

7.7p

Diluted profit/(loss) per share

5

12.2p

(3.4p)

7.7p

 

All activities arise from continuing operations.

 

(1)      For the 26 weeks ended 26 September 2020 the store closure credit of £1,992,000 was included within Other operating expenses

 

(2)      Included within Other operating income is £nil (26 weeks ended 26 September 2020: £4,089,000; 52 weeks ended 28 March 2021: £4,868,000) of grants receivable under HM Revenue & Customs Coronavirus Job Retention Scheme and £435,000 (26 weeks ended 26 September 2020: £448,000; 52 weeks ended 28 March 2021: £471,000) from similar overseas schemes.

 

 

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

26 WEEKS ENDED 25 SEPTEMBER 2021

 

 

 

Unaudited

26 weeks ended

25 September 2021 £'000

 

Unaudited

26 weeks ended

26 September 2020 £'000

 

Audited

52 weeks ended 27 March 2021

£'000

 

 

 

 

Profit/(loss) for the period

7,283

(2,022)

4,597

Items that may be reclassified subsequently to profit or loss;

 

 

 

Exchange differences on translation of foreign operations

(295)

412

(49)

 

 

 

 

Total comprehensive income/(expense) for the period

6,988

(1,610)

4,548

 

 

 

 

Attributable to:

 

 

 

Equity holders of the parent

7,287

(1,506)

4,294

Non-controlling interests

(299)

(104)

254

 

 

 

 

Total comprehensive income/(expense) for the period

6,988

(1,610)

4,548

 

 

 

CONSOLIDATED BALANCE SHEET     

AT 25 SEptember 2021

 

 

Unaudited

25 September 2021 £'000

 

Unaudited

26 September 2020 £'000

 

Audited

27 March 2021

£'000

 

 

 

 

Non-current assets

 

 

 

Intangible assets

6,412

15,032

14,965

Property, plant and equipment

13,521

15,436

13,608

Right of use assets

34,592

42,936

33,511

Interests in associates

253

128

134

Deferred tax asset

635

1,487

1,234

 

55,413

75,019

63,452

 

 

 

 

Current assets

 

 

 

Inventories

32,041

33,580

31,476

Trade and other receivables

13,204

11,453

12,609

Current tax asset

-

432

525

Cash and cash equivalents

30,328

8,595

11,820

 

75,573

54,060

56,430

 

 

 

 

Total assets

130,986

129,079

119,882

 

 

 

 

Current liabilities

 

 

 

Trade and other payables

(25,845)

(23,739)

(22,629)

Current tax liabilities

(1,912)

-

-

Lease liabilities

(15,356)

(17,849)

(14,820)

Borrowings

(1,321)

(3,431)

-

 

(44,434)

(45,019)

(37,449)

 

 

 

 

Net current assets

31,139

9,041

18,981

 

 

 

 

Non-current liabilities

 

 

 

Lease liabilities

(57,342)

(70,400)

(59,054)

Borrowings

(3,504)

(1,491)

(4,673)

 

(60,846)

(71,891)

(63,727)

 

 

 

 

Total liabilities

(105,280)

(116,910)

(101,176)

 

 

 

 

Net assets

25,706

12,169

18,706

 

 

 

 

Equity

 

 

 

Share capital

3,004

3,004

3,004

Share premium account

12,160

12,160

12,160

Own share reserve

(1,272)

(906)

(1,277)

Capital redemption reserve

154

154

154

Foreign exchange reserve

979

1,735

1,274

Retained earnings

14,546

(54)

6,957

Equity attributable to holders of the parent

29,571

16,093

22,272

Non-controlling interests

(3,865)

(3,924)

(3,566)

Total equity

25,706

12,169

18,706

 

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

26 WEEKS ENDED 25 SEPTEMBER 2021

 

 

 

 

 

 

 

     Share

capital

£'000

Share premium account £'000

Own share reserve £'000

Capital re-demption reserve £'000

Foreign exchange reserve £'000

    Retained earnings £'000

         

             Total £'000

Non-controlling interest £'000

 Total equity £'000

 

 

 

 

 

 

 

 

 

 

As at 28 March 2020

3,004

12,160

(1,061)

154

1,323

1,761

17,341

(3,820)

13,521

Loss for the period

-

-

-

-

-

   (1,713)

(1,713)

(309)

(2,022)

Other comprehensive income/(expense) for the period

-

-

-

-

207

-

207

205

412

Total comprehensive income/(expense) for the period

-

-

-

-

207

(1,713)

(1,506)

(104)

(1,610)

Charge for employee share-based payments

-

-

-

-

-

53

53

-

53

Impairment of shares in trust

-

-

155

-

-

(155)

-

-

-

Non-controlling interest foreign exchange

-

-

-

-

205

-

205

-

205

As at 26 September 2020

3,004

12,160

(906)

154

1,735

(54)

16,093

(3,924)

12,169

Profit for the period

-

-

-

-

-

6,486

6,486

133

6,619

Other comprehensive (expense)/income for the period

-

-

-

-

(686)

-

(686)

225

(461)

Total comprehensive (expense)/income for the period

-

-

-

-

(686)

6,486

5,800

358

6,158

Charge for employee share-based payments

-

-

-

-

-

52

52

-

52

Own shares

-

-

101

-

-

5

106

-

106

Exercise of share options

-

-

-

-

-

(4)

(4)

-

(4)

Release of impairment of shares in trust

-

-

(472)

-

-

472

-

-

-

Non-controlling interest foreign exchange

-

-

-

-

225

-

225

-

225

As at 27 March 2021

3,004

12,160

(1,277)

154

1,274

6,957

22,272

(3,566)

18,706

Profit/(loss) for the period

-

-

-

-

-

7,568

7,568

(285)

7,283

Other comprehensive expense for the period

-

-

-

-

(281)

-

(281)

(14)

(295)

Total comprehensive (expense)/income for the period

-

-

-

-

(281)

7,568

7,287

(299)

6,988

Charge for employee share-based payments

-

-

-

-

-

24

24

-

24

Own shares

-

-

5

-

-

-

5

-

5

Exercise of share options

-

-

-

-

-

(3)

(3)

-

(3)

Non-controlling interest foreign exchange

-

-

-

-

(14)

-

(14)

-

(14)

As at 25 September 2021

3,004

12,160

(1,272)

154

979

14,546

29,571

(3,865)

25,706

                           

 

 

 

CONSOLIDATED CASH FLOW STATEMENT

26 WEEKS ENDED 25 september 2021

 

 

Unaudited

26 weeks ended

25 September 2021  £'000

 

Unaudited

26 weeks ended

26 September 2020

£'000

 

Audited

52 weeks ended 28 March 2020

£'000

 

 

 

 

Operating profit/(loss) for the period

11,912

(202)

8,778

 

 

 

 

Adjustments for:

 

 

 

Depreciation and impairment of property, plant and equipment

1,850

2,311

4,777

Depreciation and impairment of right-of-use assets

3,257

3,654

13,245

Amortisation of intangible assets

914

542

1,476

Gain on lease modifications and disposals

(548)

(2,215)

(10,314)

(Profit)/loss on sale of property, plant and equipment

(8)

-

188

Profit on sale of intangible assets

(5,343)

-

-

Own shares transferred from trust

5

-

106

Share-based payments charge

24

53

105

 

 

 

 

Operating cash flows before movements in working capital

12,063

4,143

18,361

 

 

 

 

(Increase)/decrease in inventories

(604)

1,335

3,420

Increase in receivables

(595)

(378)

(1,534)

Increase in payables

2,966

1,532

75

 

 

 

 

Cash generated by operations

13,830

6,632

20,322

 

 

 

 

Income taxes received

101

332

201

Interest paid

(1,772)

(943)

(3,960)

 

 

 

 

Net cash inflow from operating activities

12,159

6,021

16,563

 

 

 

 

Investing activities:

 

 

 

Interest received

8

3

12

Purchases of property, plant and equipment

(1,260)

(657)

(1,895)

Proceeds from disposal of property, plant and equipment

8

-

26

Acquisition of intangible fixed assets

(868)

(633)

(2,233)

Proceeds from disposal of intangible assets

13,316

-

-

 

 

 

 

Net cash generated/(used) in investing activities

11,204

(1,287)

(4,090)

 

 

 

 

Financing activities:

 

 

 

Increase in loans from non-controlling interests

165

-

167

Repayment of borrowings

-

(750)

(750)

Principle elements of lease payments

(4,989)

(3,343)

(7,735)

Settlement of share awards

-

-

(4)

Net cash used in financing activities

(4,824)

(4,093)

(8,322)

 

 

 

 

Net increase in cash and cash equivalents

18,539

641

4,151

 

 

 

 

Cash and cash equivalents at beginning of period

11,820

7,998

7,998

Effect of foreign exchange rate changes

(31)

(44)

(329)

Cash and cash equivalents at end of period

30,328

8,595

11,820

 

 

 

 

 

 

 

 

Notes to the condensed financiAL statements

26 WEEKS ENDED 25 SEPTEMBER 2021

 

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 26 weeks ended 25 September 2021 (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 interim financial statements for the 26 weeks ended 25 September 2021 have not been reviewed or audited.

 

The information for the 52 weeks ended 27 March 2021 does not constitute statutory accounts as defined in section 434 of the Companies Act 2006.  The statutory accounts for that period were approved by the Board of Directors on 20 July 2021 and have been filed with the Registrar of Companies.  The auditor's report on those statutory 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) (3) of the Companies Act 2006.

 

2. ACCOUNTING POLICIES AND BASIS OF PREPARATION

 

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 52 weeks ended 27 March 2021.

 

These condensed consolidated interim financial statements for the 26 weeks ended 25 September 2021 have been prepared in accordance with IAS 34 'Interim Financial Reporting' as adopted by the European Union. This report should be read in conjunction with the Group's financial statements for the 52 weeks ended 27 March 2021, which have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union.

 

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. 

 

CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

 

Preparation of the condensed consolidated interim financial statements requires the Directors to make certain estimates and judgements that affect the measurement of reported revenues, expenses, assets and liabilities.

 

The significant accounting judgements and key sources of estimation uncertainty applied in the preparation of the condensed consolidated interim financial statements are consistent with those described on pages 74-76 of the Group's Annual Report and Financial Statements for the 52 weeks ended 27 March 2021.  

 PRINCIPAL RISKS AND UNCERTAINTIES

 

The management of the business and the execution of the Group's growth strategies are subject to a number of risks and uncertainties that could adversely affect the Group's future development. The principal risks and uncertainties for the Group, and the key mitigating actions used to address them are consistent with those outlined on pages 21-27 of the Group's Annual Report and Financial Statements for the 52 weeks ended 27 March 2021.

 

ALTERNATIVE PERFORMANCE MEASURES

 

In reporting financial information, the Group presents Alternative Performance Measure ("APMs"), which are not defined or specified under the requirements of IFRS. The APM used by the Group is adjusted profit/(loss) before tax.

 

The Group makes certain adjustments to the statutory profit or loss measures in order to derive APMs. Adjusting items are those items which, in the opinion of the Directors, should be excluded in order to provide a consistent and comparable view of the performance of the Group's ongoing business. Generally, this will include those items that are largely one-off and material in nature as well as income or expenses relating to acquisitions or disposals of businesses or other transactions of a similar nature. Treatment as an adjusting item provides stakeholders with additional useful information to assess the year-on-year trading performance of the Group. 

 

A reconciliation of reported profit/(loss) before tax to adjusted profit/(loss) before tax is set out below.

 

 

 

Unaudited

26 weeks ended 25 September 2021 £'000

 

Unaudited

26 weeks ended 26 September 2020 £'000

 

Audited

52 weeks ended 27 March 2021

£'000

 

 

 

 

Reconciliation to adjusted profit/(loss) before tax

 

 

 

 

 

 

 

Profit/(loss) before tax

10,212

(2,352)

4,554

 

 

 

 

Restructuring costs

-

2,151

2,370

Store closure credit

(5,700)

(1,992)

(3,702)

Impairment charge related to property, plant and equipment

-

-

590

Impairment charge related to right-of-use assets

-

-

5,725

Lease modification

-

-

(3,951)

Licence agreement exit costs

-

300

300

 

 

 

 

Adjusted profit/(loss) before tax - non-GAAP measure

4,512

(1,893)

5,886

 

 

 

 

 

 

 

 

Adjusted basic profit/(loss) per share (note 5)

6.8p

(3.4p)

10.5p

Adjusted diluted profit/(loss) per share (note 5)

6.8p

(3.4P)

10.5p

 

Restructuring costs

During the period, one-off charges of £nil (2020: £2,151,000) were incurred relating to people restructuring costs.

 

Store closure credit

During the period, 1 international store (2020: 2 international stores) was closed. The credit/profit on disposal is net of any closure and redundancy costs.

 

Licence agreement exit costs

During the period the Group incurred charges of £nil (2020: £300,000) from the write-off of its ready-to-wear and footwear licence relating to final samples and materials on non-renewal of the licence and distribution agreement for these lifestyle products.

 

3. GOING CONCERN

 

In determining whether the Group's accounts can be prepared on a going concern basis, the Directors considered the Group's business activities and cash requirements together with factors likely to affect its performance and financial position.

 

The Group had net cash of £30.3 million (2020: £8.6 million) and deferred liabilities of £5.0m (2020: £4.6m) at 25 September 2021 and had not drawn down on its revolving credit facility. The Directors have also reviewed the 12-month forecasts including their resilience in the face of possible downside scenarios.

 

Based on the assessment outlined above, the Directors have a reasonable expectation that the Group has access to adequate resources to enable it to continue to operate as a going concern for the foreseeable future. For these reasons, the Directors consider it appropriate for the Group to continue to adopt the going concern basis of accounting in preparing the Interim Report and financial statements.

 

4. TAXATION

 

The tax charge/(credit) is calculated by applying the forecast full year effective tax rate to the interim profit(/loss) and calculating the deferred tax balance for the period. The charge for the 26 weeks ended 25 September 2021 also includes a charge of £2.4m (2020: £nil) for the tax on the gain on disposal of an intangible lease asset.

 

5. EARNINGS PER SHARE ('EPS')

 

 

 

Unaudited

26 weeks ended

25 September 2021

 

Unaudited

26 weeks ended

26 September 2020

 

Audited

52 weeks ended 27 March 2021

 

 

 

 

 

Basic profit/(loss) per share

12.2p

(3.4p)

7.7p

Diluted profit/(loss) per share

12.2p

(3.4p)

7.7p

Adjusted basic profit/(loss) per share

6.8p

(3.4p)

10.5p

Adjusted diluted profit/(loss) per share

6.8p

(3.4p)

10.5p

 

 

 

 

Earnings per share is calculated based on the following data:

 

 

 

Unaudited

26 weeks ended

25 September 2021 £'000

 

Unaudited

26 weeks ended

26 September 2020 £'000

 

Audited

52 weeks ended

27 March 2021

£'000

 

 

 

 

Profit/(loss) for the period for basic and diluted earnings per share

7,283

(2,022)

4,597

 

 

 

 

Adjustments to exclude exceptional items: 

 

 

 

Restructuring costs*

-

1,757

1,931

Store closure credit*

(3,242)

(1,992)

(3,611)

Impairment relating to retail assets

-

-

590

Impairment relating to right-of-use assets 

-

-

5,725

Lease modification*

-

 

(3,200)

Licence agreement exit costs*

-

243

243

Adjusted profit/(loss) for the period for basic and diluted earnings per share

4,041

(2,014)

6,275

 

*These items are included net of tax

 

 

Unaudited

26 weeks ended

25 September 2021 Million

Unaudited

26 weeks ended

26 September 2020 Million

Audited

52 weeks ended 27 March 2021

Million

 

 

 

 

Weighted average number of ordinary shares for the purpose of basic EPS

59.5

59.5

59.5

Effect of dilutive potential ordinary shares: share options

-

-

-

 

 

 

 

Weighted average number of ordinary shares for the purpose of diluted EPS

59.5

59.5

59.5

 

The weighted average number of ordinary shares in issue during the period excludes those held by the Employee Share Trust.

 

 

 

 

6. BUSINESS AND GEOGRAPHICAL SEGMENTS

 

IFRS 8 requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by the Chief Operating Decision Maker ("CODM"), defined as the Board of Directors, to allocate resources to the segments and to assess their performance. Inter-segment pricing is determined on an arm's length basis. The Group also presents analysis by geographical destination and product categories.

(a)   Business segment

 

The Group has identified one reportable segment.

The principal activities are as follows:

The accounting policies of the reportable segment are the same as described in the Group's financial statements. Information regarding the results of the reportable segment is included below. The distribution of product globally is monitored and optimised at a Group level and effected via the Group's distribution centres in the UK, Europe, North America and Asia. Performance for the segment is assessed based on operating profit/(loss).

The Group designs, manufactures and manages the Mulberry brand for the segment and therefore the finance income and expense are attributable to this segment.
 

GROUP INCOME STATEMENT

26 WEEKS ENDED 25 september 2021

 

Note

 

Unaudited

26 weeks ended

25 September 2021 £'000

 

Unaudited

26 weeks ended

26 September 2020 £'000

 

Audited

52 weeks ended 27 March 2021

£'000

 

 

 

 

 

Retail

 

36,585

19,539

43,586

Digital

 

19,066

23,364

56,365

Wholesale

 

10,068

6,016

15,000

 

 

 

 

 

Total revenue

 

65,719

48,919

114,951

 

 

 

 

 

Cost of sales

 

(20,326)

(20,019)

(41,879)

 

 

 

 

 

Gross profit

 

45,393

28,900

73,072

 

 

 

 

 

Impairment charge related to property, plant and equipment

 

-

-

(590)

Impairment charge related to right-of-use assets

 

-

-

(5,725)

Store closure credit

 

5,700

1,992

3,702

Lease modification

 

-

-

3,951

Other operating expenses

 

(39,960)

(35,785)

(71,638)

Other operating income

 

779

4,691

6,006

 

 

 

 

 

Operating profit/(loss)

 

11,912

(202)

8,778

 

 

 

 

 

Share of results of associates

 

61

(32)

(60)

Finance income

 

8

3

12

Finance expense

 

(1,769)

(2,121)

(4,176)

 

 

 

 

 

Profit/(loss) before tax

 

10,212

(2,352)

4,554

 

 

 

 

 

Tax (charge)/credit

4

(2,929)

330

43

 

 

 

 

 

Profit/(loss) for the period

 

7,283

(2,022)

4,597

 

 

 

 

 

 

 

 

 

 

Segment capital expenditure

 

2,170

1,592

3,996

Segment depreciation and amortisation

 

6,021

6,507

19,498

Segment assets

 

130,351

127,592

118,648

Segment liabilities

 

105,280

116,910

101,176

 

For the purposes of monitoring segment performance and allocating resources between segments, the Chief Operating Decision Maker, which is deemed to be the Board of Directors monitors the tangible intangible and financial assets attributable to each segment. All assets are allocated to the reportable segment.

 

(b) Geographical markets

 

 

 

Sales revenue by

geographical market (1)

 

Non-current assets by

geographical market

 

 

Unaudited

26 weeks ended

25 September 2021

£'000

 

Unaudited

26 weeks ended

26 September 2020

£'000

 

Audited

52 weeks ended 27 March 2021

£'000

 

 

Unaudited

26 weeks ended

25 September 2021

£'000

 

Unaudited

26 weeks ended

26 September 2020

£'000

 

Audited

52 weeks ended 27 March 2021

£'000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

UK

 

40,002

 

29,038

 

68,573

 

45,829

 

61,037

 

50,792

Rest of Europe

 

8,651

 

7,132

 

15,014

 

1,483

 

9,564

 

8,487

Asia

 

13,313

 

10,199

 

24,636

 

4,160

 

3,274

 

3,362

North America

 

3,562

 

2,368

 

6,261

 

3,941

 

1,144

 

811

Rest of world

 

191

 

182

 

467

 

-

 

-

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenue

 

65,719

 

48,919

 

114,951

 

55,413

 

75,019

 

63,452

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)   Revenue by geographical market includes wholesale sales based on the location of the customer.

(c) Product categories

Leather accessories account for over 90% of the Group's revenues, of which bags represent over 70% of revenues. Other important product categories include small leather goods, shoes, soft accessories and women's ready-to-wear. Net asset information is not allocated by product category.

 

 

 

 

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