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Mulberry losses remain flat but margins improve


British luxury brand Mulberry’s pre-tax loss widened fractionally to £0.6m in the six months to 30 September, as it continued its expansion in Asia.

This compared with a £0.5m loss during the same period in 2016.

However, gross margin rose 248 basis points, improving by £1.9m, which the business attributed to a full-price focus and fewer markdown Sales.

Total revenue remained largely flat at £74.6m, compared with £74.5m in the same period last year. Retail sales were up 2%, but like-for-like sales dipped by 1%. Wholesale revenue dropped by 6% to £18m.

Chief executive Thierry Andretta told Drapers that the brand intends to continue investing in its Somerset factories as part of its effort to “gear Britishness” towards its customers. The two factories manufacture approximately 50% of the brand’s bags.

During the period it opened a centre of excellence, called the “Artisan Studio”, at one of its Somerset factories, to showcase British craftsmanship on special and limited-edition products.

He added that Mulberry continued to see strong demand from tourists in London, and despite ongoing uncertainty in the UK, the group was in a “strong position to invest” in both key international markets and its UK design and manufacturing base.

The business said retail like-for-like sales in the UK were down 1% for the 10 weeks to 2 December, with international sales up 12% and online sales up by 9%.

Despite sluggish domestic demand, the brand will continue to focus on physical expansion in the UK with its Regent Street store launch, which is expected to open in June.

Andretta said: “We want to ensure we are continuing to refine our offering for UK customers. We’re opening in Regent Street in June with a new store concept, so bricks-and-mortar remains [an integral] part of the customer journey.”

Capital expenditure for the full year ending 31 March 2018 is expected to total around £7.5m, with the majority of this on stores. This will be compounded by the rollout of the new store concept.

In terms of product, the group plans to strengthen categories supporting its core leather goods ranges. This involves investment in targeted product development and marketing concerning footwear, ready-to-wear, soft accessories and jewellery.

In the six-month period, Mulberry introduced a new product called the Amberley bag, which has been pinpointed as a bestseller for the brand.

Internationally, the brand plans to introduce omnichannel services to its China, Hong Kong and Australia markets. 

During the six-month timeframe, the group agreed a new venture with Japanese company Onward Global Fashion, opening four stores established in key locations in the country. Another store was opened after the six-month period.

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