Source - LSE Regulatory
RNS Number : 9926H
Mulberry Group PLC
30 November 2022
 

Mulberry Group plc

Results for the twenty-six weeks ended 1 October 2022

 

Investing for future growth

Mulberry Group plc (the "Group" or "Mulberry"), the British sustainable luxury brand, announces unaudited results for the twenty-six weeks ended 1 October 2022 (the "period").

 

THIERRY ANDRETTA, CHIEF EXECUTIVE OFFICER, COMMENTED:

 

"We have delivered a resilient performance across the Group, supported by strong international demand and continued investment in the UK.

 

Mulberry has a distinct brand identity, combining British heritage with innovative products and modern craft. What helps set us apart is our commitment to sustainability, as articulated in our ambitious Made to Last manifesto, in which we announced our intention to become Net Zero by 2035. This manifesto frames many of the strategic and operational decisions we make - from our commitment to source 100% of our leather from environmentally accredited tanneries, to the focus we give to circularity for our Pre-Loved bags programme. Most important is our Lifetime Service Centre in our Somerset factory where customers can get their beautiful bags and leather goods repaired and rejuvenated alongside the new designs and new collections.

 

Looking ahead, we are confident in our ability to execute our strategy and to continue to invest across the Group for our future growth, in spite of the challenging economic and geopolitical backdrop. We are well placed for the festive trading period and will continue to drive the business forward to the benefit of all stakeholders."

 

 

Financial Highlights

·      Group revenue during the period down 1% to £64.9m (2021: £65.7m)

UK retail sales were impacted by the broader economic environment, down 10% to £34.1m (2021: £38.0m)

China retail sales increased 6%, despite COVID-19 restrictions, which contributed to the 1% increase in Asia Pacific retail sales to £11.9m (2021: £11.8m)

International retail sales remained in line with the same period last year at £17.5m (2021: £17.6m)

·      Gross margin of 71% (2021: 69%) achieved due to a continued strategic focus on full-price sales and increased volume efficiencies

·      Loss before tax excluding adjusting items for the period of £2.8m (2021: profit before tax excluding adjusting items £4.5m)1 reflecting additional investment in the Group

·      Reported loss before tax of £3.8m (2021: profit before tax £10.2m which included business rates relief of £2.0m and a one-off profit on disposal of Paris lease of £5.7m)

 

Operating Highlights

·      In September 2022, launched Mulberry Sweden with the acquisition of three stores previously operated by our Swedish franchisee

·      Digital sales accounted for 25% of total Group revenue in the period (2021: 29%), as UK customers continued to return to a physical shopping experience

·      International growth supported by new stores in China and a store and the launch of digital platforms in South Korea

·      Product innovation continued in the period with the launch of the Softie bag family in new colours and shapes continuing to attract a broad range of customers

·      Established a transformation function to support the delivery of our strategy, including projects and systems that will underpin our wider business omni-channel growth in the longer term

  

Sustainability Highlights

·    Recognised as the "Sustainable Luxury Brand of The Year" at the Walpole British Luxury Awards in November 2022 for the progress we have made towards our Made to Last manifesto, showcasing our ongoing commitment to transform the business to a regenerative and circular model, encompassing the entire supply chain by 2030, and to become Net Zero by 2035

·     Proud to announce that 100% of leather (including suede and nappa linings) for Bags, Mini Bags and Small Leather Goods is sourced from tanneries with an environmental accreditation. We also maintain our commitment to offsetting the carbon emissions related to leather purchases

·      Mulberry Pre-Loved, our buy back and resale programme, generated retail sales 35% above last year

·      Lifetime Service Centre at The Rookery continues to restore more than 10,000 bags a year

·      Re-launched our ready-to-wear category with Softie inspired outerwear, using recycled nylon outer and recycled silk padding

·      Continued to focus on embedding sustainability and circularity across the entire business, which now includes a partnership with Hurr from June 2022, a circular rental marketplace

 

Current Trading

·     An improved trend in retail revenue for the eight weeks to 26 November 2022 compared to the same period last year, however there remains ongoing uncertainty in the economic and geopolitical environment

·      Gross margin in the second half is expected to be maintained at first half levels

·      Further development in the UK, and on 14 October 2022 opened a new store at the iconic Battersea Power Station development

·      Continued focus on building our direct-to-customer model with the acquisition of five stores in Australia

·      Well prepared for the important festive trading season and the usual second half weighting to trading

·      Mulberry has a clear customer proposition and plan for growth, and we are confident in our ability to execute this strategy to the benefit of all our stakeholders

 

 

 

 

 

FOR FURTHER DETAILS PLEASE CONTACT:

Mulberry

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

 

Headland (Public Relations)

Lucy Legh / Joanna clark                                                                                        Tel: +44 (0) 20 3805 4822

mulberry@headlandconsultancy.com 

HOULIHAN LOKEY UK LIMITED (FINANCIAL ADVISER AND NOMAD)

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

 

 

Notes

 

1 See note 2 on pages 15 and 16 for more details of alternative performance measures and one off costs

 



OVERVIEW 

 

Despite a backdrop of macro-economic uncertainty during the period, we continued to build Mulberry as a sustainable global luxury brand, making good progress across each of our four strategic pillars: omni-channel distribution; international development; constant innovation; and sustainable lifecycle. I would like to thank all of my colleagues for their continuing focus, hard work and commitment.

 

We continue to optimise our digital channels and global store network, and build brand awareness, with a particular focus on Asia Pacific. As previously flagged, we progressively increased our marketing expenditure during the period and invested in projects to improve the Group's legacy systems and develop the next generation of digital and omni-channel platforms, including cloud-based Software as a Solution (SaaS) implementation costs of £0.8m (2021: nil). This investment will continue in the current year and beyond and will underpin our wider business omni-channel growth for the longer term.

 

We opened stores in the region at Nanjing Deji, China, in April 2022, and a pop-up in Gwang Ju, Korea, in May 2022. We also launched on new digital platforms in Korea; Naver.com and GS.com. Further international developments included the relocation of our flagship store in New York in April 2022, and the refurbishment of our Amsterdam store in June 2022.

 

In line with our direct-to-customer model, we launched Mulberry Sweden in September 2022, following the acquisition of three stores previously operated by our Swedish franchisee, focusing on an omni-channel customer centric model. Similarly, during the period we incurred £0.9m of costs in financially supporting our Australian franchisee in preparation for acquiring these Australian assets post the period end.

 

Our Made to Last manifesto continues to set us apart, and we are progressing in our aim to reach zero carbon emissions by 2035. We continue to innovate in materials and product, including our new Softie family, which launched in February 2022. All the leather we source now comes from environmentally accredited tanneries, and we are offsetting 100% of the carbon emissions related to all leather purchases.

 

Group revenue decreased by 1% over the period but overall gross margin increased to 71% (2021: 69%) supported by our strategic focus on full-price sales and increased volume efficiencies. An underlying loss before tax for the period of £2.8m (2021: profit before tax of £4.5m) reflects the additional investments and costs highlighted above, as well as normalised business rates, with COVID-19 related reliefs benefitting the prior period by £2.0m.

 

We ended the period with net cash of £6.5m (2021: £30.3m) and deferred liabilities of nil (2021: £5.0m) and remain in a strong financial position with which to continue to progress our strategic goals.

 

 

BOARD CHANGES

 

After 35 years with Mulberry, Godfrey Davis stepped down as Chairman of the Board on 30 September 2022. Godfrey remains part of the Mulberry family having taken up a new honorary, non-Board position. I would like to take this opportunity to thank Godfrey for the outstanding contribution he has made to the Group over 35 years as director, chief executive, and chairman.

 

Chris Roberts, a non-executive director of the Group for the past 20 years, was appointed as Chairman of the Board with effect from 30 September 2022. A search for an additional independent non-executive director is underway.

 

 

CURRENT TRADING AND OUTLOOK

 

Since the period ended we have opened a new store at the iconic Battersea Power Station in London on 14 October and launched a duty free store in Hainan, Greater China.

 

We have also finalised the acquisition of the assets previously owned and run by our Australian franchisee, having provided financial support to the business during the period. We will now operate directly as Mulberry Australia through five Mulberry stores there.

 

The wider macro-economic environment continues to present some uncertainty, in particular with regards inflationary pressures. As a business we are managing inflationary challenges through various measures. We fixed our energy price in October 2021 for a three-year period, which has helped mitigate the impact of much of the current energy-price increase. We also introduced price increases in March 2022 and September 2022 - as part of our global strategy - to ensure we make no compromises on the quality of our product and our Made to Last manifesto, and to help protect our margins.

 

We are focused on investing for our future growth despite the challenging economic and geopolitical backdrop. We are confident in our ability to execute our strategy and are well prepared for the important festive trading period.

 

 

PROGRESS AGAINST OUR STRATEGY

 

With a rich heritage in leather craftmanship and a reputation for innovation, we aim to build Mulberry as the British sustainable global luxury brand through four strategic growth pillars.

 

 

Strategic pillar 1 - Omni-channel distribution

 

Aiming to enhance our customers' experience, our single global approach to inventory allows shoppers to use mulberry.com and our entire store network to research, buy and return our products in the way that suits them. Our central digital platform integrates seamlessly with our stores to offer this convenient way of choosing our products.

 

Virtual and in-store appointments continue to play a vital role in the customer journey, representing 10% of all UK store sales and resulting in an increased average transaction value higher than the walk-in equivalent.

 

Digital sales represented 25% (2021: 29%) of Group revenue. In Asia Pacific, digital sales grew to 23% (2021: 19%) of the region's sales, supported by developing strategic partnerships, including Tmall in China and Naver in Korea.

 

We had a store network of 103 points of sale across retail and franchise at the period end. In the UK we operated 39 retail stores at the period end (2021: 45), which included 15 John Lewis and 6 House of Fraser concessions. We continue to manage the business proactively and focus on optimising the store network.

 

As part of our wider strategic growth plans and omni-channel approach, we are moving to full ownership model and reducing our franchised operations. This allows us to increase our focus on the customer experience and grow the percentage of our omni-channel business. During the period we acquired three stores previously operated by our Swedish franchisee including a stand-alone store in Malmo and concessions in NK department stores in Stockholm and Gothenburg. Mulberry Sweden is now wholly owned and operated by the Group.

 

 

Strategic pillar 2 - International development

 

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

 

We saw a positive recovery in Asia Pacific, despite a number of COVID-19 restrictions still applying early in the period, with overall sales marginally up on the same period last year. We also opened stores in the region at Nanjing Deji, China, in April 2022, and a pop-up in Gwang Ju, Korea, in May 2022. On the digital side, we have launched on new platforms in Korea, Naver.com and GS.com. Further international developments include the relocation of our flagship store in New York in April 2022, and the refurbishment of our Amsterdam store in June.

 

 

Strategic pillar 3 - Constant innovation

 

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

 

The half year under review was the first full period for our new Softie family, which launched in February 2022, with new colours and shapes being added throughout the period, targeting a much younger luxury customer. In September 2022, we then diversified across categories with the launch of Softie ready-to-wear products - eight outerwear garments with recycled nylon and recycled silk padding, echoing the launch of the new Softie bag family. We continued the expansion of the Softie line with a versatile clutch bag.

 

Following the strong trend for mini bags, particularly in Asia, another strategic move this season was to reposition iconic families of bags through the launch of micro bags. These bridge the gap between our small leather goods and bags, and make our icons more affordable and potentially appealing to a broad range of customers, while increasing brand awareness.

 

 

Strategic pillar 4 - Sustainable lifecycle

 

Our Made to Last manifesto sets us apart, and we extend the life of all our products through our Lifetime Service Centre, buy back offer, and The Mulberry Exchange for pre-loved bags. We aim for our business to be regenerative and circular across the entire supply chain, by 2030, with sustainability in supply, craftsmanship, packaging and distribution - themes important to our customers.

 

We were very proud to be awarded the "Sustainable Luxury Brand of The Year" award at the Walpole British Luxury Awards on 21 November 2022. Chosen by an independent panel of experts, we were recognised for the significant progress we have made towards our Made to Last manifesto. Walpole commended us for applying sustainability best practice to all parts of the business, from our longstanding commitment to UK manufacturing in our two carbon neutral Somerset factories, to our game-changing investment in environmentally accredited tanneries and carbon neutral leather, as well as our pioneering circular economy programme, The Mulberry Exchange. 

 

We are carbon neutral across all of our UK operations and 100% of the leather we use comes from environmentally accredited tanneries. We are offsetting the carbon emissions related to all leather purchases and currently waiting for Zero Waste to Landfill certification.

 

During COVID-19 restrictions in 2020, our UK manufacturing facilities were transformed to craft thousands of PPE gowns, and quickly distributed to local NHS trusts.

 

Sustainable materials in the Mulberry range include ECONYL, Better Cotton, Eco-Scotchgrain, Bio-Acetate, recycled polyester/nylon, and responsibly sourced down and feathers. All Mulberry green paper packaging is cup cycled, with more than 2.8m cups upcycled to date, and since 2011 all cardboard and paper is Forest Stewardship Council (FSC) certified.

 

In May 2022, we launched the Carbon Neutral Lily. We also launched a partnership with circular rental marketplace, Hurr from June 2022, further developing the circularity of Mulberry bags.

 

We are adding digital identities to products, starting with pre-loved bags from our resale programme, the Mulberry Exchange.

 

We have been a certified Living Wage employer since 2021, and a hybrid working policy is in place reducing emissions and costs associated with commuting. We are also offsetting all carbon emissions associated with business travel.

 

We have a long history of donating to local charities and organisations, and as the business grows, we are committed to continuing to support our charity partners. We categorise our charitable activity into three streams: Strategic Corporate Partnerships; Tactical Local Partnerships; and Other/Reactive Partnerships. To help support this strategy we have a dedicated Charity and Community Committee, made up of a team of Mulberry employees from various business areas who assist in increasing awareness of our charitable activities, arranging fundraising and liaising with our partners. During the period we have donated seventeen pallets of write off leather, fabric, RTW and offcuts to universities, and we continually donate bags and offcuts to scrap stores, craft groups and schools.

 

During the period we commenced the recalculation of our submission to SBTi for science-based targets, to align with new forestry, land-use and agriculture guidance. We aim to have targets ready for approval by the end of 2022.

 


 

FINANCIAL REVIEW

 

 

Group revenue and gross profit

 

Sales analysis for the 26 weeks to 1 October 2022 compared to the same period last year is as follows:

 

 




2022

2021

 




£'m

£'m

% change

Digital



16.3

19.1

-15%

Stores



35.3

36.5

-3%

Retail (omni-channel)

 


51.6

55.6

-7%

Franchise and Wholesale

 


13.3

10.1

+32%

 



 

 

 

Group Revenue

 


64.9

65.7

-1%

 


















Digital



10.8

14.2

-24%

Stores



23.3

23.8

-2%

Omni-channel - UK

 


34.1

38.0

-10%

Digital



2.7

2.2

+23%

Stores



9.2

9.6

-4%

Omni-channel - Asia Pacific

 


11.9

11.8

+1%

Digital


2.8

2.6

+8%

Stores



2.8

3.2

-13%

Omni-channel - Rest of World

 


5.6

5.8

-3%

Retail (omni-channel)

 


51.6

55.6

-7%

 

 

 

 



Q1

 

Q2

 

H1 2022

 


Sales
£'m

% change

 

Sales
£'m

% change

 

Sales
£'m

% change

 










Digital


8.5

-9%


7.8

-20%


16.3

-15%

Stores


17.5

+5%


17.8

-11%


35.3

-3%

Retail (omni-channel)

 

26.0

+0%

 

25.6

-14%

 

51.6

-7%

Franchise and Wholesale

 

8.5

+33%

 

4.8

+30%

 

13.3

+32%

Group revenue

 

34.5

+7%

 

30.4

-9%

 

64.9

-1%

 

 

Group revenue decreased by 1% in the period, with Q1 growth (+7%), being offset by a decline in retail sales in Q2, impacted by the more challenging macro-economic environment, with UK total retail sales declining 10%. UK digital sales were down 24% on the prior period as customers returned to our stores, and represented 32% of total retail sales (2021: 37%). However, full price sales in the UK increased by 32% to £16.0m (2021: £13.0m) due to the continued strategic focus on full price sales.

 

Asia Pacific retail revenue increased 1% despite a number of COVID-19 restrictions early in the period, particularly within mainland China in the first quarter. China sales increased 6% in the period, with digital sales increasing by 23%.

 

Franchise and wholesale sales increased by 32%, with growth across a number of regions, particularly within the EU and Asia Pacific.

 

Gross margin increased to 71% (2021: 69%) supported by our strategic focus on full-price sales and increased volume efficiencies.

 

Other operating expenses

 

Other operating expenses increased by 42% to £48.6m (2021: £34.3m) with a view to supporting the ongoing growth of the Group.

 

The prior year period benefitted from business rates relief of £2.0m and a one-off profit of £5.7m on the early termination and the exit of a lease in Paris.

 

In the period we increased marketing expenditure to £8.2m (2021: £5.5m) to support international projects and build global brand awareness.

 

In light of the March 2021 IFRIC agenda decision to determine the treatment of Software as a Service (SaaS) costs, we incurred £0.8m of SaaS implementation costs (2021: nil) which would previously have been capitalised. We also increased technology spend to £3.3m (2021: £2.3m) to support ongoing technological investment.

 

Other operating expenses also includes £0.2m of costs in relation to the acquisition of the three stores in Mulberry Sweden, and £0.9m of costs relating to the financial support and acquisition of assets in Australia.

 

Loss before tax

 

The Group's reported loss before tax for the period was £3.8m (2021: profit before tax of £10.2m, which included a one-off profit of £5.7m on the early termination and the exit of a lease in Paris and business rates relief of £2.0m).

 

The Group's underlying loss before tax was £2.8m (2021: underlying profit before tax of £4.5m) reflecting the additional investments made in marketing, technology spend and the acquisition and support of our former franchises in Sweden and Australia as set out in "other operating expenses" above.

 

See note 2 below for further details of Alternative Performance Measures.

 

Taxation

 

The Group reported a tax charge for the period of £0.3m (2021: £2.9m, including a £2.4m charge on the profit on the disposal of an intangible lease asset). The tax charge in the period relates to deferred tax which is calculated by applying the forecast full year effective tax rate to the interim result. There is no current tax charge due to the use of brought forward tax losses.

 

Balance Sheet

 

Net working capital, which comprises inventories, trade and other receivables and trade and other payables increased by £24.3m to £43.7m at the period end (2021: £19.4m).

This increase was predominantly driven by increased inventories of £16.7m, to support our strategy to focus on a direct-to-customer model, to mitigate cost increases, and to prepare for the important festive trading season.  We are managing stock levels in light of the ongoing macro-economic uncertainty and cost increases.

 

At the period end, other trade receivables had increased by £4.8m, principally due to the treatment of SaaS prepayments, and pre-acquisition costs for the five stores in Australia.

The reduction in other trade payables of £2.9m is due to the timing of the quarterly VAT payment which has been paid at this period end date.

 

Lease liabilities (current and non-current) reduced by £12.5m to £60.2m (2021: £72.7m) due to regular lease payments made in the period.

 

Cash flow

 

The net decrease in cash and cash equivalents of £19.5m (2021: increase of £18.5m) included a £7.0m draw down of the Group's revolving credit facility (RCF). In the prior period the Group benefitted from the profit and proceeds from the early termination of the Paris lease, of £5.3m and £13.3m respectively.

 

During the period we continued to invest in capital expenditure of £5.2m (2021: £2.1m) to support longer term growth and increased inventories of £11.1m to support business growth initiatives.

 

Additional corporation tax was incurred in the period of £2.4m, in relation to the profit on disposal of our Paris lease in July 2021.  Financial support was given to ensure the continuity of five stores in Australia, which resulted in cash advances of £1.7m in the period. Since the period end these stores have been acquired and are now trading as Mulberry Australia.

 

The period end cash position was also impacted by the lower revenue and increased operating expenses incurred during the period.

 

Borrowing facilities

 

The Group had bank borrowings relating to drawdowns under its RCF of £7.0m at 1 October 2022 (2021: £nil). The borrowings shown in the balance sheet also include loans from minority shareholders in the Chinese and Japanese subsidiaries of £5.6m (2021: £4.8m).

 

The Group's net cash balance (cash and cash equivalents less overdrafts) at 1 October 2022 was £6.5m (2021: £30.3m).

 

During the period the Group extended its secured RCF with HSBC until March 2024, with unchanged banking covenants. The covenants are tested quarterly on a "frozen GAAP" basis (excluding the impact of IFRS 16) and contain a 12-month rolling EBITDA target ratio and a maximum net debt target.

 

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

 

 

CONSOLIDATED INCOME STATEMENT

26 WEEKS ENDED 1 OCTOBER 2022

 

Note

 

Unaudited

26 weeks ended

1 October 2022 £'000

 

Unaudited

26 weeks ended

25 September 2021 £'000

 

Audited

53 weeks ended 2 April 2022

£'000

 

 

 

 

 

Revenue

 

64,920

65,719

152,411

Cost of sales

 

(18,954)

(20,326)

(43,106)

 

 

 

 

 

Gross profit

 

45,966

45,393

109,305

 

 

 

 

 

Other operating expenses

 

(48,599)

(34,260)

(85,878)

Other operating income

 

416

779

1,220

 

 

 

 

 

Operating (loss)/profit

 

(2,217)

11,912

24,647

 

 

 

 

 

Share of results of associates

 

36

61

127

Finance income

 

5

8

19

Finance expense

 

(1,574)

(1,769)

(3,467)

 

 

 

 

 

(Loss)/profit before tax

 

(3,750)

10,212

21,326

 

 

 

 

 

Tax charge

4

(279)

(2,929)

(2,157)

 

 

 

 

 

(Loss)/profit for the period

 

(4,029)

7,283

19,169

 

 

 

 

 

Attributable to:

 

 

 

 

Equity holders of the parent

 

(2,715)

7,568

19,985

Non-controlling interests

 

(1,314)

(285)

(816)

(Loss)/profit for the period

 

(4,029)

7,283

19,169

 

 

 

 

 

Basic (loss)/profit per share

5

(6.8p)

12.2p

32.2p

Diluted (loss)/profit per share

5

(6.8p)

12.2p

32.2p

 

All activities arise from continuing operations.

 

 

 

 

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

26 WEEKS ENDED 1 OCTOBER 2022

 

 

 

Unaudited

26 weeks ended

1 October 2022 £'000

 

Unaudited

26 weeks ended

25 September 2021 £'000

 

Audited

53 weeks ended 2 April 2022

£'000

 

 

 

 

(Loss)/profit for the period

(4,029)

7,283

19,169

Items that may be reclassified subsequently to profit or loss;

 

 

 

Exchange differences on translation of foreign operations

408

(295)

(116)

 

 

 

 

Total comprehensive (expense)/income for the period

(3,621)

6,988

19,053

 

 

 

 

Attributable to:

 

 

 

Equity holders of the parent

(1,882)

7,287

19,954

Non-controlling interests

(1,739)

(299)

(901)

 

 

 

 

Total comprehensive (expense)/income for the period

(3,621)

6,988

19,053

 

 

 



CONSOLIDATED BALANCE SHEET

AT 1 OCTOBER 2022

 

 

Unaudited

1 October 2022 £'000

 

Unaudited

25 September 2021 £'000

 

Audited

2 April 2022

£'000

 

 

 

 

Non-current assets

 

 

 

Intangible assets

6,390

6,412

6,056

Property, plant and equipment

16,765

13,521

14,618

Right of use assets

30,453

34,592

32,221

Interests in associates

375

253

335

Deferred tax asset

1,871

635

2,148

 

55,854

55,413

55,378

 

 

 

 

Current assets

 

 

 

Inventories

48,726

32,041

36,783

Trade and other receivables

17,984

13,204

15,927

Current tax asset

409

-

-

Cash and cash equivalents

6,544

30,328

25,669

 

73,663

75,573

78,379

 

 

 

 

Total assets

129,517

130,986

133,757

 

 

 

 

Current liabilities

 

 

 

Trade and other payables

(22,962)

(25,845)

(24,975)

Current tax liabilities

-

(1,912)

(2,382)

Lease liabilities

(11,199)

(15,356)

(11,108)

Borrowings

(3,798)

(1,321)

(3,278)

 

(37,959)

(44,434)

(41,743)

 

 

 

 

Net current assets

35,704

31,139

36,636

 

 

 

 

Non-current liabilities

 

 

 

Lease liabilities

(49,021)

(57,342)

(52,547)

Borrowings

(8,814)

(3,504)

(1,721)

 

(57,835)

(60,846)

(54,268)

 

 

 

 

Total liabilities

(95,794)

(105,280)

(96,011)

 

 

 

 

Net assets

33,723

25,706

37,746

 

 

 

 

Equity

 

 

 

Share capital

3,004

3,004

3,004

Share premium account

12,160

12,160

12,160

Own share reserve

(923)

(1,272)

(1,269)

Capital redemption reserve

154

154

154

Foreign exchange reserve

1,566

979

1,158

Retained earnings

23,968

14,546

27,006

Equity attributable to holders of the parent

39,929

29,571

42,213

Non-controlling interests

(6,206)

(3,865)

(4,467)

Total equity

33,723

25,706

37,746

 

 

 

 

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

26 WEEKS ENDED 1 OCTOBER 2022

 

 

 

 

 

 

 

    

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 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

-

-

-

-

(295)

-

(295)

-

(295)

Total comprehensive (expense)/income for the period

-

-

-

-

(295)

7,568

7,273

(285)

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)

As at 25 September 2021

3,004

12,160

(1,272)

154

979

14,546

29,571

(3,865)

25,706

Profit/(loss) for the period

 

-

 

-

 

-

 

-

 

-

 

12,417

 

12,417

 

(531)

 

11,886

Other comprehensive income for the period

-

-

-

-

179

-

179

-

179

Total comprehensive income/(expense) for the period

-

-

-

-

179

12,417

12,596

(531)

12,065

Charge for employee share-based payments

-

-

-

-

-

45

45

-

45

Own shares

-

-

3

-

-

-

3

-

3

Exercise of share options

-

-

-

-

-

(2)

(2)

-

(2)

Non-controlling interest foreign exchange

-

-

-

-

-

-

-

(71)

(71)

As at 27 March 2021

3,004

12,160

(1,269)

154

1,158

27,006

42,213

(4,467)

37,746

(Loss)/profit for the period

-

-

-

-

-

(2,715)

(2,715)

(1,314)

(4,029)

Other comprehensive income for the period

-

-

-

-

408

-

408

-

408

Total comprehensive income/(expense) for the period

-

-

-

-

408

(2,715)

(2,307)

(1,314)

(3,621)

Charge for employee share-based payments

-

-

-

-

-

23

23

-

23

Own shares

-

-

346

-

-

-

346

-

346

Exercise of share options

-

-

-

-

-

(346)

(346)

-

(346)

Non-controlling interest foreign exchange

-

-

-

-

-

-

-

(425)

(425)

As at 1 October 2022

3,004

12,160

(923)

154

1,566

23,968

39,929

(6,206)

33,723















 

 

 

 

 

 

CONSOLIDATED CASH FLOW STATEMENT

26 WEEKS ENDED 1 OCTOBER 2022

 

 

Unaudited

26 weeks ended

1 October 2022 £'000

 

Unaudited

26 weeks ended

25 September 2021 £'000

 

Audited

53 weeks ended 2 April 2022

£'000

 

 

 

 

Operating (loss)/profit for the period

(2,217)

11,912

24,647

 

 

 

 

Adjustments for:

 

 

 

Depreciation and impairment of property, plant and equipment

1,922

1,850

3,702

Depreciation and impairment of right-of-use assets

3,577

3,257

6,682

Amortisation of intangible assets

835

914

1,778

Gain on lease modifications and lease disposals

(243)

(548)

(2,160)

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

(2)

(8)

38

Profit on sale of intangible assets

-

(5,343)

(5,343)

Own shares transferred from trust

-

5

8

Share-based payments charge

23

24

69

 

 

 

 

Operating cash flows before movements in working capital

3,895

12,063

29,421

 

 

 

 

Increase in inventories

(11,960)

(604)

(5,400)

Increase in receivables

(2,057)

(595)

(3,318)

(Decrease)/increase in payables

(1,073)

2,966

2,136

 

 

 

 

Cash (used)/generated by operations

(11,195)

13,830

22,839

 

 

 

 

Income taxes (paid)/received

(2,790)

101

(154)

Interest paid

(1,582)

(1,772)

(3,470)

 

 

 

 

Net cash(outflow)/inflow from operating activities

(15,567)

12,159

19,215

 

 

 

 

Investing activities:

 

 

 

Interest received

5

8

19

Purchases of property, plant and equipment

(4,030)

(1,260)

(4,419)

Proceeds from disposal of property, plant and equipment

2

8

59

Acquisition of intangible fixed assets

(1,179)

(868)

(897)

Proceeds from disposal of intangible assets

-

13,316

13,316

 

 

 

 

Net cash (used)/generated in investing activities

(5,202)

11,204

8,078

 

 

 

 

Financing activities:

 

 

 

Increase in loans from non-controlling interests

94

165

313

New borrowing

7,000

-

-

Principle elements of lease payments

(5,840)

(4,989)

(13,736)

Settlement of share awards

-

-

(5)

Net cash generated/(used) in financing activities

1,254

(4,824)

(13,428)

 

 

 

 

Net (decrease)/increase in cash and cash equivalents

(19,515)

18,539

13,865

 

 

 

 

Cash and cash equivalents at beginning of period

25,669

11,820

11,820

Effect of foreign exchange rate changes

390

(31)

(16)

Cash and cash equivalents at end of period

6,544

30,328

25,669

 

 

 

 

Notes to the condensed financiAL statements

26 WEEKS ENDED 1 OCTOBER 2022

 

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 1 October 2022 (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 1 October 2022 have not been reviewed or audited.

 

The information for the 53 weeks ended 2 April 2022 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 28 June 2022 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 53 weeks ended 2 April 2022.

 

These condensed consolidated interim financial statements for the 26 weeks ended 1 October 2022 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 53 weeks ended 2 April 2022, 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 83-84 of the Group's Annual Report and Financial Statements for the 53 weeks ended 2 April 2022.  

 

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 34-39 of the Group's Annual Report and Financial Statements for the 53 weeks ended 2 April 2022.

 

ALTERNATIVE PERFORMANCE MEASURES

 

The alternative performance measure ("APM") used by the Group is underlying profit/(loss) before tax.

 

In reporting financial information, the Group presents an APM, which is not defined or specified under the requirements of IFRS. The Group believes that this APM, which is not considered to be a substitute for, or superior to, IFRS measures, provide stakeholders with additional helpful information on the performance of the business. This APM is consistent with how the business performance is planned and reported within the internal management reporting to the Board of Directors. This measure is also used for the purpose of setting remuneration targets.

The Group makes certain adjustments to the statutory profit or loss measures in order to derive the APM. 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. 

Adjusting items are identified and presented on a consistent basis each period and a reconciliation of reported (loss)/profit before tax to underlying (loss)/profit before tax is set out below

 

 

 

Unaudited

26 weeks ended

1 October 2022 £'000

 

Unaudited

26 weeks ended

25 September 2021 £'000

 

Audited

53 weeks ended 2 April 2022

£'000

 

 

 

 

 

Reconciliation to underlying (loss)/profit before tax

 

 

 

 

 

 

 

 

 

(Loss)/profit before tax

(3,750)

10,212

21,326

 

 

 

 

 

 

Store closure credit

(210)

(5,700)

(6,757)

 

Sweden acquisition costs

193

-

-

 

Australia debtor write off

933

-

-

 


 

 

 

 

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

(2,834)

4,512

14,569

 

 

 

 

 

 

 

 

 

 

 

Underlying basic (loss)profit per share (note 5)

(5.3p)

6.8p

24.8p

 

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

(5.3p)

6.8p

24.8p

 

 

 

Store closure credit

During the period, 2 stores (2021: 2 stores) were closed. The credit on disposal relates to the release to the income statement of lease liabilities of £210,000 (2021: £423,000), a profit on disposal of an intangible asset £nil (2021: £5,343,000) and a credit for the release of lease exit and redundancy costs £nil (2021: £66,000).

 

Sweden acquisition costs

During the period the Group took over the running of three stores in Sweden previously owned by the Swedish franchisee. The Group incurred costs of £193,000 (2021: £nil).

 

Australian debtor write off

During the period the Group took over the running of five stores in Australia and incurred a write-off of debtors of £933,000 (2021: £nil).

 

 

 

 

 

 

 

 

 

 

 

 

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 £6.5 million (2021: £30.3 million) and deferred liabilities of £nil (2021: £5.0m) at 1 October 2022 and had drawn down £7.0million (2021: £nil) 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 relates to deferred tax which is calculated by applying the forecast full year effective tax rate to the interim (loss)/profit and calculating the deferred tax balance for the period.

 

 

5. EARNINGS PER SHARE ('EPS')

 

 

 

Unaudited

26 weeks ended

1 October 2022 £'000

 

Unaudited

26 weeks ended

25 September 2021 £'000

 

Audited

53 weeks ended 2 April 2022

£'000

 

 

 

 

Basic (loss)/profit per share

(6.8p)

12.2p

32.2p

Diluted (loss)/profit per share

(6.8p)

12.2p

32.2p

Underlying basic (loss)/profit per share

(5.3p)

6.8p

24.8p

Underlying diluted (loss)/profit per share

(5.3p)

6.8p

24.8p

 

 

 

 

Earnings per share is calculated based on the following data:

 

 

 

Unaudited

26 weeks ended

1 October 2022 £'000

 

Unaudited

26 weeks ended

25 September 2021 £'000

 

Audited

53 weeks ended 2 April 2022

£'000

 

 

 

 

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

(4,029)

7,283

19,169

 

 

 

 

Adjustments to exclude exceptional items: 

 

 

 

Store closure credit*

(206)

(3,242)

(4,411)

Sweden acquisition costs

193

-

-

Australia debtor write off*

855

-

-

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

(3,187)

4,041

14,758

 

*These items are included net of tax

 

 

 

 

 

 

 

 

Unaudited

26 weeks ended

1 October 2022 £'000

 

Unaudited

26 weeks ended

25 September 2021 £'000

 

Audited

53 weeks ended 2 April 2022

£'000

 

 

 

 

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

59.6

59.5

59.5

Effect of dilutive potential ordinary shares: share options

-

-

-

 

 

 

 

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

59.6

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

 

For the financial years to March 2020 and March 2021, the Group changed its segmental reporting to show a consolidated view of the Group's performance as one operating (and reporting) segment, reflecting the level of information the CODM considered the most appropriate to monitor business performance and allocate resources to support the growth of the Mulberry brand as a whole.

In the past financial year, the Group has extended its omni-channel network in order to support the Group's global growth ambitions. Mulberry has thus become increasingly reliant on individual market-level profitability metrics to enable them to make timely market-centric decisions that are operational and investment in nature. For the 53 week period ending 2 April 2022, the Group updated the segmental analysis disclosures away from a consolidated view of segments and moved towards a more regional view of segments (being UK, Asia Pacific and Other International) to reflect the current business operations and the way the business internally reports, and the information that the CODM reviews and makes strategic decisions based on its financial results. As a result of this change in approach the prior year numbers for the 26 weeks ended 25 September 2021 have been restated.

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. Performance for the segment is assessed based on operating profit/(loss).

 


GROUP INCOME STATEMENT

26 WEEKS ENDED 1 OCTOBER 2022

 

 

 

 

 

UK

£'000

 

 

 

Asia Pacific

£'000

 

 

Other International

£'000

 

 

 

Eliminations £'000

 

 

 

Total

£'000

Revenue

 

 

 

 

 

 

Omni-channel

 

72,280

11,826

5,120

(37,665)

51,561

Wholesale

 

2,182

3,141

8,036

 

13,359

 

 

 

 

 

 

 

Total revenue

 

74,462

14,967

13,156

(37,665)

64,920

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment profit/(loss)

 

665

(1,969)

1,703

 

399

 

 

 

 

 

 

 

Central costs

 

 

 

 

 

(1,700)

Store closure credit

 

 

 

 

 

210

Sweden acquisition costs

 

 

 

 

 

(193)

Australia debtor write off

 

 

 

 

 

(933)

 

 

 

 

 

 

 

Operating loss

 

 

 

 

 

(2,217)

 

 

 

 

 

 

 

Share of results of associates

 

 

 

 

 

36

Finance income

 

 

 

 

 

5

Finance expense

 

 

 

 

 

(1,574)

 

 

 

 

 

 

 

Loss before tax

 

 

 

 

 

(3,750)

 

 

 

 

 

 

 

 

 

 

 

 

 

UK

£'000

 

 

 

Asia Pacific

£'000

 

 

Other International

£'000

 

 

 

Central

 £'000

 

 

 

Total

£'000

 

 

 

 

 

 

 

Segment capital expenditure

 

2,786

614

1,429

29

4,858

Segment depreciation and amortisation

 

3,955

926

457

996

6,334

Segment assets

 

84,413

20,994

14,132

8,107

127,646

Segment liabilities

 

62,229

8,617

14,341

10,607

95,794

 

 

 

 

 

 

 

 

26 WEEKS ENDED  25 SEPTEMBER 2021

 

 

 

 

 

UK

£'000

 

 

 

Asia Pacific

£'000

 

 

Other International

£'000

 

 

 

Eliminations £'000

 

 

 

Total

£'000

Revenue

 

 

 

 

 

 

Omni-channel

 

71,057

11,550

5,550

(32,507)

55,650

Wholesale

 

7,508

589

1,972

 

10,069

 

 

 

 

 

 

 

Total revenue

 

78,565

12,139

7,522

(32,507)

65,719

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment profit/(loss)

 

7,269

(152)

848

 

7,965

 

 

 

 

 

 

 

Central costs

 

 

 

 

 

 (1,753)

Store closure credit

 

 

 

 

 

5,700

 

 

 

 

 

 

 

Operating profit

 

 

 

 

 

11,912

 

 

 

 

 

 

 

Share of results of associates

 

 

 

 

 

61

Finance income

 

 

 

 

 

8

Finance expense

 

 

 

 

 

(1,769)

 

 

 

 

 

 

 

Profit before tax

 

 

 

 

 

10,212

 

 

 

 

 

 

 

 

 

 

 

 

 

 

UK

£'000

 

 

 

Asia Pacific

£'000

 

 

Other International

£'000

 

 

 

Central

 £'000

 

 

 

Total

£'000

 

 

 

 

 

 

 

Segment capital expenditure

 

1,028

1,126

-

16

2,170

Segment depreciation and amortisation

 

4,429

295

291

1,006

6,021

Segment assets

 

89,018

17,124

10,967

13,342

130,351

Segment liabilities

 

65,371

8,130

15,291

16,488

105,280

 

 

 

 

 

 

 

 

 


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

53 WEEKS ENDED  2 APRIL 2022

 

 

 

 

 

UK

£'000

 

 

 

Asia Pacific

£'000

 

 

Other International

£'000

 

 

 

Eliminations £'000

 

 

 

Total

£'000

Revenue

 

 

 

 

 

 

Omni-channel

 

163,727

27,551

11,849

(72,960)

130,167

Wholesale

 

3,968

3,862

14,414

 

22,244

 

 

 

 

 

 

 

Total revenue

 

167,695

31,413

26,263

(72,960)

152,411

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment profit/(loss)

 

10,297

(232)

7,356

 

17,421

 

 

 

 

 

 

 

Central costs

 

 

 

 

 

469

Store closure credit

 

 

 

 

 

6,757

 

 

 

 

 

 

 

Operating profit

 

 

 

 

 

24,647

 

 

 

 

 

 

 

Share of results of associates

 

 

 

 

 

127

Finance income

 

 

 

 

 

19

Finance expense

 

 

 

 

 

(3,467)

 

 

 

 

 

 

 

Profit before tax

 

 

 

 

 

21,326

 

 

 

 

 

 

 

 

 

 

 

 

UK

£'000

 

 

 

Asia Pacific

£'000

 

 

Other International

£'000

 

 

 

Central

 £'000

 

 

 

Total

£'000

 

 

 

 

 

 

 

Segment capital expenditure

 

2,216

2,321

1,000

71

5,608

Segment depreciation and amortisation

 

8,639

954

565

2,004

12,162

Segment assets

 

89,026

20,707

11,701

10,175

131,609

Segment liabilities

 

61,682

8,221

13,597

12,511

96,011

 

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

 

(b) Product categories

Leather accessories account for around 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.

 

 

7. EVENTS AFTER THE REPORTING PERIOD

On 11 November 2022 the Group acquired the assets of five stores in Australia that had been previously operated by a franchisee. The stores will now be managed by our subsidiary Mulberry Company (Australia) Pty Limited.     

The Group acquired fixed assets of £1.8m and inventories of £0.6m and will settle employee liabilities of £0.2m. In addition, the Group has written off debtors of £0.9m (see note 3).                   

                                                                                                                                                                                                                                                                                               

 

 

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