Shares in British luxury brand Mulberry (MUL:AIM) were marked down 6.25% to 262.5p on Wednesday with investors disappointed by wider first half losses.

Further investment to develop the brand in Asia and ‘the effect of a challenging UK market’ were blamed, although chief executive Thierry Andretta is confident of trading profitably in the second half, bolstered by Christmas spending.


This time last year Mulberry, best known for its high-end leather bags, was struggling with the impact of the House of Fraser administration. Today’s results for the half ended 28 September revealed the leather goods maker continues to find life tough.

Mulberry’s loss before tax grew from £8.2m to £9.9m on revenue of £68.9m (2018: £68.3m), reflecting retail sales up 8% and a 24% drop in wholesale revenue due to a deliberate strategy of selling more and more products directly to customers.

The top line proved a mixed bag in terms of the geographical performance too.


UK sales were down 4% and international revenues rose 12%, even amid disruption caused by the protests in Hong Kong. Despite the successful launch of Millie and Iris, two new soft bags, Mulberry’s domestic sales were hit by an increasingly promotional market and lower footfall to stores.

UK shopper demand was described as ‘subdued’ against a backdrop of Brexit uncertainty.


Shares in Mulberry have shed the best part of 90% since hitting a £22.54 10-year peak back in 2012, although Andretta is pursuing an ambitious strategy to turn the company into a global luxury brand and revive its fortunes.

In today’s update, he flagged ‘further progress with our strategy through continued investment in a direct to customer, International, Digital and omni-channel model’, while insisting Mulberry is seeing the benefit of ‘recent initiatives in Asia which remains a significant growth opportunity. This will support our ambition for International to become a greater proportion of group revenue.’


However in terms of current trading, Andretta cautioned similar trends continue within the retail business, with international up and the core UK business remaining ‘challenging’.

The good news is that during the second half, Andretta expects Asia to ‘continue to generate double digit sales growth and for international sales to increase as a proportion of overall group revenue.’

Furthermore, against an uncertain UK backdrop and with the important Christmas period ahead, the board expects Mulberry ‘to trade profitably and to generate cash during the second half of the financial year.’

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Issue Date: 13 Nov 2019