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Thursday 13 December 2018

Mulberry looks overseas as UK demand slows

The group posted pre-tax losses of £609,000 for the six months to September 30 against £515,000 a year earlier after like-for-like sales fell 1%.

Mulberry interims
Mulberry interims

By Holly Williams, Press Association Deputy City Editor

Luxury handbag maker Mulberry has revealed widening half-year losses but said strong international demand and tourist spend is helping offset a slowing UK market.

The group posted pre-tax losses of £609,000 for the six months to September 30 against £515,000 a year earlier after like-for-like sales fell 1%.

Chief executive Thierry Andretta said the UK market remains “uncertain”, with domestic sales falling 1% despite a boost from overseas shoppers taking advantage of the Brexit-hit pound, while overseas sales dropped 3%.

Thierry Andretta (Mulberry/PA)

But the group has returned to sales growth since the half-year, with a 12% surge in international sales helping overall sales lift 1% in the 10 weeks to December 2.

Mr Andretta said: “We continue to see strong demand from tourists in London and whilst the UK remains uncertain, the group remains in a strong position to invest in further developing the customer experience in key international markets and enhancing its unique UK design and manufacturing base.”

The group is focusing efforts on expanding overseas, in particular to Asian markets as a growth area.

It recently announced a tie-up with Japanese firm Onward Global Fashion and Mr Andretta said the firm had seen a “successful” start to trading in the Japanese market since the deal was struck in July.

The Amberley bag has sold well (Mulberry/PA)

Mulberry, which makes around 50% of its bags in two factories based in Somerset, said interim losses widened partly as a result of another £800,000 pumped into marketing, while it also traditionally makes the bulk of its profits in the second half of its financial year.

Chairman Godfrey Davis told the Press Association the group had seen a “solid” UK performance in the half-year and first 10 weeks of the second half thanks to the tourist boost.

The group added that UK trading had reflected the move towards less promotions and more full-price sales, which knocked like-for-like figures but has pushed up profit margins.

Mulberry, which has 66 stores, said Christmas trading so far has been good, with best-sellers including the popular Amberley bag range – launched in June at prices ranging from £450 to £1,395.

The group has been staging a bounce-back over the past two years as it reverses an ill-fated attempt to move into premium luxury and compete with the likes of Gucci and Dior.

It said sales had shown an “encouraging” response to new collections under recently-hired creative director Johnny Coca.

The group is also planning a “see now, buy now” offer, like luxury peer Burberry, allowing customers to buy directly from the catwalk during London Fashion Week next February.

Press Association

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