UK's Mulberry Group's H1 revenue down 19% YoY amid global challenges

The gross profit of the company was £37.3 million (~$46.71 million), down 24 per cent compared to £49.1 million for the same period in the prior year. The gross margin reduced to 67 per cent (vs 70 per cent in 2023) principally due to stock optimisation to manage inventory and working capital levels. The operating expenses decreased 16 per cent to £50.7 million in comparison to £60.0 million in 2023, as action was taken to manage the cost base, Mulberry said in a press release.

Underlying loss before tax of the company was £15.3 million vs £12.3 million in H1 2023 due to reduced revenue and margin partially offset by lower operational costs. The reported loss before tax was £15.7 million (vs £12.8 million in H12023).

Digital performance of the company continues to robust, with sales representing 33 per cent of group’s revenue in comparison to 29 per cent in 2023, added the release.

The United Kingdom (UK) retail sales decreased 14 per cent to £31.3 million in H1 2024 in comparison to £36.2 million in 2023. Full price sales in the UK decreased by 13 per cent to £24.3 million (2023: £27.9 million) with the full price mix unchanged at 77 per cent (2023: 77 per cent). UK store sales declined 17 per cent against the prior period, however, average transaction value increased by 9 per cent. UK digital sales were down 8 per cent on the prior period, however, average transaction value increased by 1 per cent compared to the prior period and represented 38 per cent of total UK retail sales (2023: 35 per cent).

Total International retail sales decreased 17 per cent to £19.5 million in H1 2024 (2023: £23.5 million), with the reduction in Asia Pacific partially.

Asia Pacific retail sales decreased by 31 per cent to £9.3 million in the period under review (vs £13.5 million in 2023). China and Korea saw the largest declines at 52 per cent and 29 per cent respectfully, with the challenging economic environment and reduced footfall impacting all markets.

Rest of World (RoW) retail revenue, which includes Europe and the US, increased 2 per cent. Ireland store sales increased by 8 per cent because of Brown Thomas which has converted to a retail concession, having previously been classified within wholesale. Retail sales in Italy increased by 51 per cent.

Franchise and wholesale sales decreased by 46 per cent, with declines across all countries as wholesale and franchise partners have placed lower orders due to the macroeconomic conditions, particularly in Italy and Denmark.

The net increase in cash and cash equivalents of £1.7 million included a £2.5 million drawdown of the Group's revolving credit facility (RCF) and £1.3 million utilisation of a new supplier trade finance facility shown within proceeds from net borrowings.

As a result of the financial performance in the period there was an operating cash outflow of £7.0 million (2023: outflow £8.0 million). This cash outflow has been offset by a decrease in net working capital which had a cash benefit of £15.7 million largely driven by the reduction in inventories of £20.2 million because of the stock optimisation program.

During the 26-week period, the company continued to invest, including £1.9 million (2023: £5.3 million) of capital expenditure and £0.8 million (2023: £3.3 million) of SaaS costs shown within operating costs. This spend supports investment in our omni-channel distribution and international development, including the upgrade of our warehouse management systems and business planning tool, however, considering trade during the period the level of investment has been managed.

"Though I've only been in the role of CEO for under three months, the first half results illustrate the clear need to reprioritise and rebuild the business. Mulberry is an iconic brand. It stands out for its rich heritage and craftsmanship - qualities that our customers recognise and value deeply. Combined with our unique position in the market, offering responsible luxury products of unmatched quality and longevity, crafted in our Somerset factories, Mulberry truly is one of a kind. We are now working on initiatives to renew the brand's relevance, initially for UK consumers and then for our international audience,” said Andrea Baldo, chief executive officer (CEO) of Murlberry.

Fibre2Fashion News Desk (SG)