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Mulberry mulls future after losses deepen amid poor handbag sales

The luxury fashion company saw pre-tax losses deepen after a challenging retail environment and the collapse of department store chain House of Fraser hit it hard.

IG Analyst

Publication date : 2018-11-07T15:49:38+0000

Source: Bloomberg

Mulberry (LON:MUL) saw revenues slide 8% to £68.3 million in its half year (H1) results, down from £74.6 million, and pre-tax losses sunk further to £8.2 million compared to the £600,000 hole the company suffered this time last year.

The luxury fashion brand blamed its poor performance on a challenging retail environment and that led to a significant decline in handbag sales – its signature product – and the collapse of department store chain House of Fraser.

The demise of House of Fraser ended up costing the group around £2.1 million.

Despite its poor showing, its CEO Thierry Andretta remains that the company’s decision to ‘focus on international growth is the correct strategy to develop Mulberry’.

‘We are well positioned for the Christmas trading period, which as ever, will determine our full year result,’ he added.

Mulberry goes global for growth

The luxury brand has invested heavily in growing its international presence, particularly in Asia, where the company has launched in South Korea and Japan, expanding its retail network in the continent to 20 stores.

The company has also launched new digital partnerships in China with luxury e-commerce platforms including Toplife, Secoo (NASDAQ:SECO) and Vipshop (NYSE:VIPS).

The investment helped international retail sales climb 13% and global digital sales increasing by 5%. Elsewhere, the company said that its UK business remains profitable, despite retail sales falling 11%.

‘In the UK, our most important market, we are pleased to have signed a concession agreement with John Lewis & Partners, advancing our direct to consumer reach,’ Andretta said.

‘We are proud to be the largest manufacturer of luxury leather goods in the UK and remain committed to supporting "Made in England" through our two Somerset factories,’ he added.

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