TIDMMUL
RNS Number : 1202E
Mulberry Group PLC
28 June 2023
Mulberry Group plc
Preliminary results for the 52 weeks ended 1 April 2023
A year of further progress; continuing to deliver on strategic
objectives
Mulberry Group plc ("the Group" or "Mulberry"), the British
luxury brand, announces results for the 52 weeks ended 1 April 2023
(the "period").
THIERRY ANDRETTA, CHIEF EXECUTIVE OFFICER, COMMENTED:
"We have delivered a positive Group performance this year thanks
to our unique brand identity, beautiful innovative products and
market-leading omni-channel proposition. Our Made to Last Manifesto
also continues to set us apart and ensures that sustainability
remains central to our strategy, with our ambition to transform to
a regenerative and circular model across our supply chain by 2030
firmly on track. We made further progress during the period,
reaching our target of sourcing 100% of our leather from tanneries
with environmental accreditations including Leather Working Group
and Sustainable Leather Foundation while all other materials and
packaging used remain fully sustainable and recyclable. We
continued to expand our circularity programme offering our
pre-loved bags in the UK and Europe and restoring over 10,000 bags
every year.
We have made significant investments in the Company this year,
as well as expanding our direct-to-customer model with the recent
acquisitions of businesses in Sweden and Australia. I am also
delighted today to announce we now have full ownership of Mulberry
Japan Co. Limited. These investments were supported by our
transformation function, designed to support the delivery of our
strategy, with a particular focus on projects and systems that will
underpin our growth in the longer term.
We are well set for the year ahead with the right strategy in
place to deliver on our growth plans. Finally, I want to thank
colleagues for their continued dedication to Mulberry, bringing
their creativity and commitment to our business."
Financial Highlights
-- Group revenue up 4% to GBP159.1m (2022: GBP152.4m) as we
continued to deliver on strategic objectives, despite
macro-economic uncertainty
o UK retail sales of GBP87.7m (2022: GBP88.5m). The first half
of the year in particular was impacted by the broader economic
environment, however performance improved in the second half
o Asia Pacific retail sales increased by 3% to GBP28.9m (2022:
GBP28.0m), despite a number of COVID-19 lockdowns in the region,
particularly in China and South Korea
o International retail sales increased 12% to GBP46.5m (2022:
GBP41.7m)
o Digital sales GBP48.4m (2022: GBP47.5m) up 2% and representing
30% of total revenue (2022: 31%). This continues to be above pre
COVID-19 levels
-- Maintained gross margins of 71.2% (2022: 71.7%) with full
price retail sales increasing by 6% and representing 78% of total
retail sales (2022: 76%)
-- Underlying profit before tax of GBP2.5m (2022: profit before
tax GBP14.6m) included GBP4.0m (2022: GBP0.5m) of Software as a
Service (SaaS) costs and additional investment in the Group
-- Reported profit before tax of GBP13.2m (2022: profit before tax GBP21.3m)
-- The Group's revolving credit facility of GBP15.0m has been extended until September 2027
Operating Highlights
-- Three stores in Sweden and five stores in Australia
previously owned by our franchise partners were acquired during the
period further developing our direct-to-customer model
-- Launch of the new M Zip bag family in November 2022, followed
in December 2022 by the Link bag family
-- Gross margins maintained with a continued strategic focus on
full price sales and increased volume efficiencies
-- Digital sales represented 30% of Group revenue (2022: 31%).
This was 24% in 2020 and reflects the ongoing strength and
importance of this channel
-- Established a transformation function to support the delivery
of our strategy, including projects and systems that will underpin
our growth in the longer term
Sustainability Highlights
-- 100% of all leather, suede and nappa is sourced from
tanneries with environmental accreditations, which include Leather
Working Group, Sustainable Leather Foundation and ISO:14001
-- In November 2022, awarded the Sustainability Luxury Brand of
the Year at the Walpole British Luxury Awards and in February 2023
were recognised by the Great British Brands Awards for Championing
the Planet, recognising our accelerated progress towards achieving
a truly regenerative and circular business
-- Carbon reduction targets submitted to the Science-Based
Targets initiative (SBTi) in February 2023
-- Lifetime Service Centre at The Rookery, which is now restoring more than 10,000 bags a year
-- Within our circular Mulberry Exchange programme, we have
expanded the use of our camera technology to give customers a
true-to-life view of every preloved bag
Current Trading and outlook
-- Group revenue for the first 12 weeks of the new financial year is 6% ahead of last year
-- Retail revenue is up 15%, with our newly acquired Sweden and
Australia stores continuing to perform well
o International retail sales are 46% above the same period last
year
o Asia Pacific retail sales 34% above the same period last year,
which now includes our newly acquired stores in Australia
o As anticipated, due to the impact of the broader economic
environment, UK retail sales are in line with the same period last
year
-- Total franchise and wholesale revenue is up 5% against the
same period last year, excluding stores now reported within
omni-channel revenue
-- As part of the Group's strategy to expand the
direct-to-consumer model, Mulberry plc now has full ownership of
Mulberry Japan Co. Limited, with effect from 27 June 2023
FOR FURTHER DETAILS PLEASE CONTACT:
Mulberry Group plc
Charles Anderson (Group Finance Director) TEL: +44 (0) 20 7605
6793
Headland (Public Relations)
Lucy Legh / Joanna Clark
mulberry@headlandconsultancy.com TEL: +44 (0) 20 3805 4822
Houlihan Lokey UK Limited (Financial and Nominated Adviser)
Tim Richardson TEL: +44 (0) 20 7484 4040
Chairman's Letter
Dear Shareholder,
This is my first set of results as Chairman of Mulberry,
following over 20 years in the business as a non-executive
Director. In this new position, since my appointment I have
continued to see Mulberry deliver against its strategic growth plan
as one of the most iconic British luxury brands, with a rich
heritage and reputation.
As a Board we are responsible for the long-term success of the
Company and as part of that, I remain committed to achieving the
best standards of governance. To do this, the Board has a mix of
skillsets and experience across the luxury sector and the public
markets. We are well advanced in broadening the skills base and
experience still further with the appointment of an additional
independent non-Executive director, which I expect will be
announced shortly.
The Group is in a strong position to continue with strategic
growth plans, taking the opportunities to accelerate our
direct-to-customer model, maintaining our full price strategy and
crucially, continuing to produce beautiful products in our Somerset
factories and serving our customers in both our welcoming stores
and on our market-leading digital platform.
Whilst we see every opportunity for Mulberry to continue to
succeed, we must remain mindful of the external climate and ongoing
sector headwinds including high inflation. The Board is
recommending a final dividend for the 52-week period to 1 April
2023 of 1 pence per ordinary share (2022: 3 pence per ordinary
share) to be paid, (subject to shareholder approval) on 24 November
2023 to shareholders on the register at 27 October 2023.
We have made excellent progress so far and while there is much
more to do, we are confident that we have the right strategy in
place to continue to deliver for our shareholders and broader
stakeholders alike.
I would like to thank our teams again for all their hard work
this year.
Christopher Roberts
Chairman
27 June 2023
Strategic Report
Chief Executive's Statement
Overview
We have continued to deliver on our strategic objectives despite
a backdrop of macro-economic uncertainty, which demonstrates that
the decisions we have taken over the last few years have
contributed to our long-term resilience. The work of building
Mulberry as a sustainable global luxury brand is making good
progress based on each of our four strategic pillars: omni-channel
distribution; international development; constant innovation; and
sustainable lifecycle. Much of this progress is thanks to the hard
work and commitment of our many colleagues around the world and I
recognise and thank them for their enduring efforts.
Progress against our strategy
Our investment in omni-channel distribution and international
development continued during the period, especially in Asia Pacific
where our business continues to make great progress. With the
acquisitions made during the period, Australia and Sweden, we are
well positioned to deliver on our strategy. We established a
transformation function to support its delivery, with a particular
focus on systems that will underpin our growth in the longer term.
These include further enhancements to our store and digital
platforms to build on our omni-channel capabilities and changes to
our back-office systems, which will enhance efficiency, streamline
our operations and support the continued evolution of the
business.
Our omni-channel approach allows our customers to use
Mulberry.com and our store network to research, buy and return our
products in the way that suits them. With our established digital
channel, we are well positioned to adapt to changing customer
preferences between different retail channels. In line with our
omni-channel distribution strategy, we have launched new digital
platforms in Korea - Naver.com and GS.com - and we also have a
digital concession at Harrods in the UK.
We continued to develop our business in Asia Pacific, despite
the impact of COVID-19 in China, opening new stores in China and
Korea. Further international developments included the relocation
of our flagship store in New York and the refurbishment of our
Amsterdam store.
In October 2022, we opened a new store at the iconic Battersea
Power Station development. In February 2023 we made the difficult
decision to close our Bond Street store. Much of our business came
from its popularity with tourists enjoying the VAT-free shopping
environment. However, when this was removed, we saw a dramatic drop
in footfall and sales. We have redeployed all Bond Street
colleagues across our London store network.
We continued to build our direct-to-customer model which enables
us to engage with our customer, progress our pricing strategy and
maintain our brand positioning. In September 2022 we launched
Mulberry Sweden following the acquisition of three stores
previously operated by our Swedish franchisee. We also acquired the
assets of five stores in Australia previously owned and run by our
Australian franchisee, having provided financial support to the
business during the period. We will now operate these stores and
online, directly as Mulberry Australia.
Trading Performance
Trading in the first half of the period was challenging,
primarily driven by the macro-economic environment in the UK and
ongoing COVID-19 lockdowns in China. We saw an improvement in
retail revenue over the second half, with Group revenue 9% ahead of
the same period last year. This was helped by an improving
environment in China over recent months and under-pinned by our
direct-to-customer model and increased brand awareness.
Group revenue for the period increased by 4% and our continued
strategic focus on full price sales helped to maintain the gross
margin at 71%.
Asia Pacific retail revenue grew by 3%, despite the COVID-19
lockdowns, particularly in China and South Korea. This region also
now includes our newly acquired stores in Australia and we are
pleased with their performance at this early stage.
Franchise and wholesale revenue increased by 12% as our partners
continued their recovery post COVID-19 and demand increased. This
was despite taking full ownership of stores in Sweden and Australia
during the period, which would previously have been classified as
franchise and wholesale revenue.
Operational performance
I am proud of our growing product range, which is tailored to
the varying preferences of both traditional Mulberry store
purchasers and digital shoppers. The emphasis continues to be on
high quality and full price sales, as we champion beautiful
products, which are made to last, in our carbon-neutral Somerset
factories.
Our continuing investment in the Asia Pacific region during the
year, despite a number of ongoing COVID-19 restrictions has further
helped diversify our network and we have seen an improving
environment in China over recent months.
Made to Last
Our Made to Last manifesto continues to set us apart and we are
progressing in our aim to reach zero carbon emissions by 2035. We
will achieve this through product innovation and continuing our
progress to a regenerative and circular business model, whilst
striving to implement pertinent practices into our own operations
and wider supply chain.
We continue to innovate in materials and product. We source all
our leather, suede and nappa from tanneries with environmental
accreditations. All of the non-leather materials we use are also
fully sustainable. Furthering our partnership with the World Land
Trust, we are offsetting the carbon emissions associated with our
leather purchasing, another small step on our ambitious path to
reduce our overall carbon footprint.
Supporting circularity, our Lifetime Service Centre - where
customers can have their products repaired and renewed - now
restores more than 10,000 bags a year. Our resale programme,
Pre-loved Bags, helps ensure many of our products are used and
valued for generations. Our buy-back scheme, The Mulberry Exchange,
enables customers to return their Mulberry bag and receive a credit
towards a new one.
In November 2022, we won the award for Sustainability Luxury
Brand of the Year at the Walpole British Luxury Awards and in
February 2023 our accelerated progress towards achieving a truly
regenerative and circular business was recognised by the Great
British Brands Awards for Championing the Planet.
Financial performance
Despite the ongoing challenges and volatility in the period,
particularly in the UK and China, Group revenue increased by 4%
over the prior year and overall gross margin was maintained at
71.2% (2022: 71.7%) due to our continued focus on full price sales
and volume efficiencies. Underlying profit for the period of
GBP2.5m (2022: GBP14.6m) included GBP4.0m (2022: GBP0.5m) of
Software as a Service (SaaS) costs, additional investment in the
Group and the additional operational costs of our new stores in
Sweden and Australia. The prior period also benefitted from GBP3.5m
of COVID-19 related reliefs.
A reported profit before tax of GBP13.2m (2022: GBP21.3m),
includes impairment reversals for our Bond Street and Regent Street
stores of GBP14.8m, as a result of the closure of Bond Street in
February 2023.
Digital sales were 30% (2022: 31%) of Group revenue in the
period, reflecting the ongoing strength of this channel and our
omni-channel approach. China retail sales increased by 2% despite
being impacted by a number of COVID-19 lockdowns throughout the
period.
We ended the year with net cash of GBP0.7m (2022: GBP25.7m).
During the period we continued to invest in projects and systems
that will underpin our growth in the longer term and continued to
invest in the Group's global brand awareness.
Supported by the new transformation function, projects are being
progressed to update the Group's legacy systems and to build on our
omni-channel capabilities. We expect this increase in investment to
continue in current year and beyond.
As a business we continue to manage inflationary challenges
through various measures. We fixed our energy price in October 2021
for a three-year period, which has helped mitigate the impact of
much of the current energy-price increases. We introduced price
increases in March 2022 and September 2022 - as part of our global
strategy - to ensure we make no compromises on the quality of our
product and our Made to Last manifesto and to help protect our
margins.
Current Trading and Outlook
Group revenue for the first 12 weeks of the new financial year
is 6% ahead of last year. Omni-channel (stores and digital) revenue
is up 15%, with our newly acquired Sweden and Australia stores
continuing to perform well.
Total international retail sales are 46% above the same period
last year. Asia Pacific retail sales are up 34% , which now
includes our newly acquired stores in Australia. As anticipated,
due to the impact of the broader economic environment, UK retail
sales are in line with the same period last year.
Total franchise and wholesale revenue is up 5% against the same
period last year, excluding stores now reported within omni-channel
revenue.
On 25 May 2023 Mulberry was awarded the "Brand of the Year"
award at the Drapers Sustainable Fashion Awards. We were recognised
for the progress made on our Made to Last manifesto goals,
including our ongoing commitment to a Net Zero future. We were also
praised for our thriving apprenticeship program which nurtures the
next generation of craftspeople and manufacturing leaders and our
longstanding commitment to British manufacturing.
We continue to build and optimise our global network and from 27
June 2023 the Group now holds 100% ownership of Mulberry Japan.
Notwithstanding the ongoing uncertainty in the economic and
geopolitical environment, we are confident in our strategy and
continue to invest, including in further store openings across the
network planned later this year. We remain focused on reaching our
goal to be the leading sustainable global luxury brand, to the
benefit of all our stakeholders.
Thierry Andretta
Chief Executive Officer
27 June 2023
Progress against our strategy
With our rich heritage in leather craftmanship and reputation
for innovation, we strive to grow the Group through our four
strategic pillars which focus on omni-channel distribution,
international development, constant innovation and a sustainable
lifecycle.
Strategic Pillar 1
Omni-channel distribution
We look to continually enhance our omni-channel distribution
model. This includes through selective store openings, the
continued roll-out of the latest Mulberry store concept and further
enhancements to our digital platforms. Our latest store concept
enables us to better display and promote our collections through
innovative customer-facing technology. It creates more space and
supports our omni-channel proposition and has helped to elevate our
brand position, outperforming more traditional outlets.
Aligned with our strategic growth plans and omni-channel
approach to distribution, we also look to continue to build on our
direct-to-customer model and reduce our franchised operations. This
allows us to increase our focus on customer experience and grow the
proportion of our omni-channel business.
We ended the period with 111 points of sale. During the period
we acquired our Swedish and Australian stores previously operated
by our franchise partners, as well as new agreements with Nordstrom
and Selfridges.
In the UK we operated 40 retail stores ( own stores and
concessions run by our employees) at the year end, which included
15 John Lewis and four House of Fraser concessions. In February
2023 we took the difficult decision to close our Bond Street store
in London. The lack of VAT-free shopping in the UK and the decline
in tourist shoppers had impacted footfall and sales. All colleagues
were re-deployed across our London store network.
Virtual and in-store appointments continued to drive value,
accounting for 8% of all UK store sales during the period and
resulting in a larger average transaction value than for walk-in
customers.
In Asia Pacific, following the conversion of five stores in
Australia, we operated 43 retail stores at the year end (2022: 37).
China experienced a number of store closures and lockdowns which
had a significant impact on revenue and South Korea was also
impacted with reduced footfall throughout the period. Full price
mix of retail sales in Asia Pacific increased to 76% (2022: 75%)
driven by higher sell-throughs and reduced mark-down periods.
During the year, 30% of Group revenue came from digital sales,
demonstrating the continuing trend towards omni-channel shopping
across all regions. In Asia Pacific, digital sales were 22% of the
region's sales and are now supported by local fulfilment in Japan
and Korea and a concession gift channel with Korean messenger
platform Kakao. During the period we also launched new platforms in
Korea, Naver.com and GS.com, as well as Little Red Book in
China.
Strategic Pillar 2
International Development
Our continued investment in our international subsidiaries
supported the Group's overall growth. During the period, we opened
stores in the region at Nanjng Deji, China, in April 2022, a pop-up
in Gwang Ju, Korea, in May 2022, Chengdu SKP and Hainan duty free
store, both in China in October 2022. We launched on new digital
platforms in Korea, Naver.com and GS.com and Little Red Book in
China. The openings further enhance brand awareness, strengthen our
luxury positioning and support our full-price strategy.
The acquisition of our franchise stores in Sweden and Australia
represented further progress in our international development,
along with the opening of our first men's concession in NK
Stockholm in March 2023.
New agreements are in place with Nordstrom in the US and
Selfridges in the UK, further developing our direct-to-customer
model. At the period end, we operated three Nordstrom concessions
as well as a digital platform, with the view to expand this further
in the current financial period.
Further international developments include the relocation of our
flagship store in New York in April 2022, the refurbishment of our
Amsterdam store in June 2022 and the opening of a standalone store
in Dublin in January 2023.
Strategic Pillar 3
Constant Innovation
We continue to work with new materials and methods of creation
and production, to adapt to changing customer tastes and to meet
demand. At the same time, we are adding new services and
transforming our supply chain to be agile to market trends, while
reducing lead time to match the increase in digital demand.
We launched the Softie family in February 2022, with new colours
and shapes being added throughout the year, targeting a younger
luxury customer. In September 2022, we diversified across
categories with the launch of Softie ready-to-wear products - eight
outerwear garments with recycled nylon and recycled silk padding,
echoing the launch of the new Softie bag family. We continued the
expansion of the Softie line with a versatile clutch bag.
Following the strong trend for mini bags, particularly in Asia,
we launched micro bags for a number of our iconic bag families.
This bridged the gap between our small leather goods and our bags
and made our icons more affordable and potentially appealing to a
broader range of customers.
In November 2022 we launched M Zip, a modern, M-shaped
silhouette available in three sizes. This was followed in December
2022 by Link, a re-interpretation of our previous soft shaped
Leighton bag, a fresh take on a beloved classic, available in two
sizes.
Mulberry x Miffy launched at the end of December 2022, to
celebrate the Lunar new year of the Rabbit, featuring Miffy across
a series of bags and accessories. This collection further supported
the Group's ongoing commitment to sustainable innovation through
its Made to Last ethos; sustainable products made with 100%
environmentally accredited carbon neutral leather.
The exciting Mulberry x Paul Smith collaboration will launch in
Autumn 2023. W ith a shared approach to heritage style and
sustainable innovation, the ten-piece capsule reworks our timeless
Antony bag, utilising pops of primary colours alongside Paul
Smith's hallmark Signature Stripe.
Strategic Pillar 4
Sustainable Lifecycle
Our Made to Last manifesto sets us apart and we extend the life
of all our products through our Lifetime Service Centre, buy-back
offer and The Mulberry Exchange for pre-loved bags. We aim for our
business to be regenerative and circular across the entire supply
chain, by 2030, with sustainability in supply, craftsmanship,
packaging and distribution - themes important to our customers.
We are carbon neutral across all of our UK operations and source
all the leather, suede and nappa we use from tanneries with
environmental accreditations. For over five years, we have worked
with our tannery partners to help them improve their environmental
standards and achieved certification, stimulating positive changes
within the whole leather industry. We have also taken on new
tanneries that already have certification. Other sustainable
materials in the Mulberry range include ECONYL, Better Cotton,
Eco-Scotchgrain, Bio-Acetate, recycled polyester/nylon and
responsibly sourced down and feathers. All Mulberry green paper
packaging is cup cycled, with more than 2.8m cups upcycled to date
and since 2011 all cardboard and paper is Forest Stewardship
Council (FSC) certified.
In May 2022, we launched the Carbon Neutral Lily. We also
launched a partnership with circular rental marketplace, Hurr from
June 2022, further developing the circularity of Mulberry bags.
In February 2023, we submitted our science-based targets for
carbon reduction to the Science Based Targets Initiative (SBTi). We
expect to have our targets approved and validated by the end of
2023. Furthering our partnership with World Land Trust, we are also
offsetting the carbon emissions associated with our leather
purchasing through their Carbon Balanced programme. Our project
aims to protect approximately 316,000 acres of tropical rainforest
and other habitats in Guatemala to prevent the area from being
cleared to make way for cropland and pasture. Carbon offsetting is
a small step on our ambitious path to reducing our overall business
carbon footprint, with an aim of achieving net zero by 2035.
We have been a certified Living Wage employer since 2021 and a
hybrid working policy is in place reducing emissions and costs
associated with commuting. We are also offsetting all carbon
emissions associated with business travel.
We have a long history of donating to local charities and
organisations and as the business grows, we will continue to
support our charity partners. We categorise our charitable activity
into three streams: Strategic Corporate Partnerships; Tactical
Local Partnerships; and Other/Reactive Partnerships. To help
support this, our Charity and Community Committee, made up of
Mulberry employees from various business areas, help increase
awareness of our charitable activities, arrange fundraising and
liaise with our partners. During the period we have donated
seventeen pallets of write-off leather, fabric, ready to wear and
offcuts to universities and we regularly donate bags and offcuts to
scrap stores, craft groups and schools.
We were very proud to be recognised for several awards during
the period:
-- Sustainable Luxury Brand of The Year award at the Walpole
British Luxury Awards in November 2022, recognising the significant
progress we have made towards our Made to Last manifesto.
-- Championing the Planet award at the Great British Brands
Awards for our outstanding work in getting ahead of our targets to
achieve a truly regenerative and circular business.
-- On 25 May 2023 Mulberry was awarded the "Brand of the Year"
award at the Drapers Sustainable Fashion Awards. We were recognised
for the progress made towards our Made to Last manifesto goals,
including our ongoing commitment to Net Zero future. We were also
praised for our thriving apprenticeship program which nurtures the
next generation of craftspeople and manufacturing leaders and our
longstanding commitment to British manufacturing.
Financial review
Group revenue and gross profit
52 weeks 53 weeks % Change
ended 1 April ended 2 April
GBPm 2023 2022
Group Digital 48.4 47.5 2%
Stores 85.8 82.7 4%
Retail (omni-channel) 134.2 130.2 3%
--------------- --------------- ---------
Franchise and Wholesale 24.9 22.2 12%
--------------- --------------- ---------
Group Revenue 159.1 152.4 4%
--------------- --------------- ---------
UK Digital 33.8 35.7 (5%)
Stores 53.9 52.8 2%
Omni-channel - UK 87.7 88.5 (1%)
--------------- --------------- ---------
Asia
Pacific Digital 6.3 5.8 9%
Stores 22.6 22.2 2%
Omni-channel - Asia
Pacific 28.9 28.0 3%
--------------- --------------- ---------
ROW Digital 8.3 5.9 41%
Stores 9.3 7.8 19%
Omni-channel - Rest
of World 17.6 13.7 28%
--------------- --------------- ---------
Retail (omni-channel) 134.2 130.2 3%
--------------- --------------- ---------
Franchise
and
Wholesale UK 3.4 2.8 21%
Asia Pacific 4.2 3.9 8%
Rest of world 17.3 15.5 12%
Franchise and Wholesale 24.9 22.2 12%
--------------- --------------- ---------
Group revenue for the period increased by 4% over the prior
period, with the challenges of the first half of the year, being
offset by increased revenues across the second half.
GBPm H1 H2 FY
FY23 FY22 % Change FY23 FY22 % Change FY23 FY22 % Change
Group Digital 16.3 19.1 (15%) 32.1 28.4 13% 48.4 47.5 2%
Stores 35.3 36.5 (3%) 50.5 46.2 9% 85.8 82.7 4%
Retail (omni-channel) 51.6 55.6 (7%) 82.6 74.6 11% 134.2 130.2 3%
----- ----- --------- ----- ----- --------- ------ ------ ---------
Franchise
and Wholesale 13.3 10.1 32% 11.6 12.1 (4%) 24.9 22.2 12%
----- ----- --------- ----- ----- --------- ------ ------ ---------
Group Revenue 64.9 65.7 (1%) 94.2 86.7 9% 159.1 152.4 4%
----- ----- --------- ----- ----- --------- ------ ------ ---------
UK retail sales were 1% below the prior period, with growth
impacted by the challenging macro-economic environment particularly
in the first half of the year. The second half saw an improved
performance, with UK retail revenue 6% ahead of the same period
last year. UK digital sales declined by 5% year-on-year and
represented 39% of UK retail sales (2022: 40%) and still well above
pre COVID-19 levels. In line with overall trends UK digital sales
in the second half grew 6% above the prior period. Omni-channel
full price sales in the UK increased by 3% to GBP68.9m (2022:
GBP67.1m), representing 79% (2022: 76%) of total omni-channel
revenue for the period.
Asia Pacific retail revenue increased by 3%. From November 2022,
this region now includes the five stores in Australia now wholly
owned by the Group. During the period footfall in the Asia Pacific
region was heavily impacted by a number of COVID-19 related
restrictions and lockdowns, particularly within China and South
Korea.
Franchise and wholesale sales increased by 12%, despite a number
of previously franchised stores being recategorised as retail
during the period.
Continuing our strategic focus on full-price sales, gross margin
during the period was maintained at 71.2% (2022: 71.7%), despite
actions taken during the second half to optimise inventory
levels.
Key Performance Indicators
Key performance indicators (KPIs) help management to measure
progress against the Group's strategy. Currently the focus is on
financial KPIs, which include total revenue, gross margin and
profit before tax, all of which are discussed within this financial
review .
Other Operating Expenses
Other operating expenses in the period increased by 26% to
GBP108.5m (2022: GBP85.9m), with underlying operating expenses
increasing by 6%. A breakdown of which is given below;
52 weeks 53 weeks % Change
ended 1 ended 2
GBPm April 2023 April 2022
Operating expenses 36.0 36.7 (2%)
Staff Costs 44.2 40.7 9%
Depreciation and Amortisation 13.9 12.2 14%
Systems & Comms 7.0 5.7 23%
Foreign exchange gain (0.2) (0.1) 100%
Underlying operating
expenses 100.9 95.2 6%
SaaS Costs 4.0 0.5 700%
Store Closure Credit (0.2) (6.8) (97%)
New initiatives - Sweden
& Australia 3.8 - -
7.6 (6.3) (221%)
COVID-19 Relief - (3.0) -
- (3.0) -
108.5 85.9 26%
============ ============
The prior period benefitted from COVID-19 related business rates
and rent relief of GBP3.0m. These schemes were not available in the
period to 1 April 2023.
The prior period also benefited from store closure credits of
GBP6.8m, which largely related to the disposal of the Paris
lease.
In light of the March 2021 IFRIC agenda decision to clarify the
treatment of Software as a Service (SaaS) costs, during the period
we expensed GBP4.0m (2022: GBP0.5m) of SaaS costs, in line with the
accounting for configuration and customisation cost arrangements.
We expect to incur further SaaS costs in the current period. We
also increased technology spend to GBP7.0m (2022: GBP5.7m) to
support the investment in projects and systems investments.
The acquisition of our stores in Sweden and Australia have
increased costs during the period by GBP3.8m. The full year impact
of these new initiatives will be included in the current
period.
Other Operating Income
Included within other operating income is GBPnil (2022: GBP0.5m)
of grants receivable in non-UK territories for COVID-19 relief.
Profit before tax
The Group's underlying profit for the period was GBP2.5m (2022:
GBP14.6m), included GBP4.0m (2022: GBP0.5m) of Software as a
Service (SaaS) costs, additional investment in the Group and the
additional operational costs of our new stores in Sweden and
Australia. The prior period also benefitted from GBP3.5m of
COVID-19 related reliefs.
Reported profit before tax for the period was GBP13.2m (2022:
profit before tax GBP21.3m) and includes impairment reversals of
GBP14.8m in relation to Bond Street and Regent Street, as a result
of the closure of the Bond Street store in February 2023, net of an
impairment charge of GBP2.4m in respect of Korea goodwill.
52 weeks 53 weeks
ended 1 ended 2
GBPm April 2023 April 2022
Underlying profit before
tax pre SaaS costs 6.5 15.1
SaaS costs 4.0 0.5
Underlying profit
before tax 2.5 14.6
Store closure credit 0.2 6.7
Net Impairment credit 11.4 -
Australia and Sweden acquisition
costs (1.0) -
Reported profit before
tax 13.2 21.3
Taxation
The Group reported a tax charge of GBP1.8m (2022: charge
GBP2.2m), an effective rate of tax of 13% (2022: 10%). The
effective tax rate is lower than the UK tax rate of 19%, primarily
due to the use of prior year tax losses, which were not recognised
as a deferred tax asset.
Balance Sheet
Net working capital, which comprises inventories, trade and
other receivables and trade and other payables increased by
GBP12.3m to GBP40.0m at the period end (2022: GBP27.7m).
This increase was predominantly driven by increased inventories
of GBP11.5m, to support our strategy to focus on a
direct-to-customer model. We have taken actions during the second
half of the year to optimise inventory levels and continue to
closely monitor inventory levels, in light of continued
macro-economic uncertainty.
At the period end, other trade receivables were GBP19.9m (2022:
GBP15.9m), the increase principally due to the treatment of SaaS
prepayments, as well as timing of rent and rates prepayments at the
period end. Trade and other payables increased by GBP3.1m to
GBP28.1m (2022: GBP25.0m) largely driven by timing of payments
due.
Dividends
The Board is proposing a final dividend for the 52-week period
to 1 April 2023 of 1 pence per ordinary share (2022: 3 pence per
ordinary share) to be paid, (subject to shareholder approval) on 24
November 2023 to shareholders on the register at 27 October
2023.
Cashflow
The net decrease in cash and cash equivalents of GBP19.0m (2022:
increase of GBP13.9m) included a GBP4.0m drawdown of the Group's
revolving credit facility (RCF) and GBP2.1m of overdraft
utilisation. In the prior period the Group benefitted from the
proceeds from the early termination of the Paris lease of
GBP13.3m.
During the period we continued to invest including GBP11.0m
(2022: GBP5.3m) of capital expenditure, GBP4.0m (2022: GBP0.5m) of
SaaS costs and GBP3.2m (2022: GBPnil) of acquisition costs. This
spend supports investment in our omni-channel distribution and
international development, including the development of a new
digital platform and the acquisition of new stores in Sweden and
Australia.
Inventories have also increased by GBP11.5m to support our
strategy to focus on our direct-to-customer model as well as
mitigate any cost increases.
Additional corporation tax was incurred in the period of
GBP2.4m, in relation to the profit on disposal of our Paris lease
in July 2021.
Borrowing Facilities
The Group had bank borrowings related to drawdowns under its
revolving credit facility (RCF) of GBP4.0m at 1 April 2023 (2022:
GBPnil). The borrowings shown in the Balance Sheet also include
loans from minority shareholders in the Chinese and Japanese
subsidiaries of GBP5.5m (2022: GBP5.0m).
The Group's net cash balance (comprising cash and cash
equivalents, less overdrafts and borrowings) at 1 April 2023 was
GBP0.7m (2022: GBP25.7m). Net cash comprises cash balances of
GBP6.8m (2022: GBP25.7m) less bank borrowings of GBP6.1m (2022:
GBPnil), excluding loans from related parties and non-controlling
interests of GBP5.5m (2022: GBP5.0m) Net cash also excludes lease
liabilities of GBP55.3m (2022: GBP63.7m) which are not considered
to be core borrowings.
Since the period end the Group has extended its RCF with HSBC
until September 2027, with unchanged banking covenants. The
GBP15.0m RCF is secured and covenants are tested on a quarterly
basis and contain a net debt to EBITDA ratio and a fixed charge
cover ratio. Covenants are tested on a "frozen GAAP" basis and
exclude the impact of IFRS16 and SaaS costs. In addition, the Group
has a GBP4.0m overdraft facility and a further USD 1.9m overdraft
facility in China, which are renewed annually.
Corporate Social Responsibility - Made To Last
In 2021, we celebrated 50 years of Mulberry. As part of the
celebrations, we launched our Made to Last Manifesto. It's a
commitment to responsible innovation and a philosophy that goes to
the very heart of what we do in every part of the business. From
sourcing and manufacturing, to our relationships with the
communities around us, we continue to strive for the best
sustainable practices.
Our sustainability strategy
Made to Last is also the name given to our business
sustainability strategy. It's evolved from our previous policies
and practices that aimed for a responsible and sustainable future.
It focuses on the following key pillars:
1. Net Zero Future - the very centre of our strategy, aiming for
net zero carbon emissions by 2035.
2. Regenerative Sourcing - we will source all materials
responsibly, trial and introduce material innovations and transform
to a regenerative business model.
3. Net Zero Manufacturing - we will measure our impact so we can
protect the environment and the livelihoods within our supply
chain.
4. Product Circularity - we will strengthen our offers that aim
for a fully circular product lifecycle, to reduce waste and
encourage sustainable consumption.
5. Inclusive Communities - we will positively impact our
communities and work for a more diverse, equitable and inclusive
future.
A summary follows here and you can read further detail in our
stand-alone Sustainability Report available on the Responsibility
pages of Mulberry.com;
https://www.mulberry.com/row/madetolast/responsibility.
1. Net Zero Future
Baseline Carbon Footprint: During 2021, we worked with the
Carbon Trust to measure our global carbon footprint across Scopes
1, 2 and 3, using FY2019-20 as a baseline. Scope 1 relates to
emissions from operations in our direct control, while Scope 2 is
indirect emissions from energy purchased. Scope 3 relates to
indirect emissions from the value chain not in our control and not
included in Scope 2, such as in raw materials and business
travel.
Results showed that just 7% of our emissions related to Scope 1
and 2 and 93% of our emissions occur in Scope 3. We are now working
on an update to our global carbon footprint for 2023, which will
serve as an update to our 2020 footprint.
UK Carbon Footprint: in line with SECR requirements we have
carried out a UK carbon footprint calculation. We continue to
offset the carbon emissions associated with out UK carbon footprint
in partnership with World Land Trust, investing in their Carbon
Balanced programme.
Scope 1 and 2
We have already made some progress addressing these by
installing:
-- solar panels on the roof of The Willows factory
-- LED lighting fixtures with light and motion sensors, in factory, warehouse and office sites
-- LED lighting in 33% of our store network
-- electric vehicle charging points at The Rookery.
Since 2019, we have offset our UK Scope 1 and 2 carbon footprint
through World Land Trust's Carbon Balanced programme.
The split of our emissions is as follows:
Stores 33%
Factories 32%
Offices 20%
Warehousing 11%
Vehicles 4%
Scope 3
It's more difficult to access data further down the supply
chain, making it essential to collaborate with suppliers to reduce
our carbon emissions.
To begin with, we are addressing our Scope 3 emissions by:
-- surveying our Tier 1 and 2 product suppliers regularly to
better understand their environmental practices
-- setting targets for our retail stores to increase their recycling rate
-- introducing a hybrid-working policy for employees, to reduce commuting emissions
-- updating our travel policy to promote more financially and
environmentally sustainable travel behaviour.
Science-based targets
We have developed science-based targets with the Carbon Trust
and submitted them February 2023 for approval by the Science-Based
Target initiative (SBTi). The targets show companies how much and
how quickly they need to reduce their greenhouse-gas emissions to
prevent the worst effects of climate change. They are aligned to
the most recent climate science, which currently advises limiting
global warming to less than 1.5 degC. We expect to have our targets
assessed by SBTi in October 2023.
2. Regenerative Sourcing
Sustainable leather
Leather goods are the foundation of our business and comprise
over 90% of our collection. We source finished leather directly
from tanneries in the UK, Italy, Germany, Spain and Turkey. In
2020, we joined the Sustainable Leather Foundation (SLF) as a
founding partner. As well as assessing a leather manufacturer's
environmental credibility, SLF reviews their social performance and
governance, offering us a holistic view of sustainability matters.
We aim to source all our leather from accredited sources by 2023,
by which we mean tanneries with a valid Leather Working Group
audit, Sustainable Leather Foundation audit or ISO:14001
accreditation.
In November, we launched our first 'farm to finished product'
bags, in collaboration with Scottish tannery, Muirhead, a member of
Scottish Leather Group, which make the world's
lowest-carbon-intensity leather, at 1.1kg of CO2 per hide.
We continue to invest in establishing and growing this approach
by working with organisations including the Leather Working Group
and the Sustainable Leather Foundation, who support best practice
in animal welfare, traceability and environmental management.
Material innovation
We source a variety of fabrics, materials and other components
to create our collections and look to ensure their credentials
align with our low-impact materials strategy. Our approach so far
has been to make rolling changes to our conventional materials,
such as cotton, as we develop each seasonal range, to improve its
sustainability credentials.
Sourcing transparency
Our international supply chain is based on sourcing quality raw
materials and finished products which meet our quality and
environmental expectations. Alongside our UK manufacturing
facilities, we source from a select Group of long-standing partners
in Italy, Turkey, China and Vietnam. We work with countries that
have established skills and heritage within the leather industry
and that can support our high-quality standards and progressive
new-product-development programmes.
All our suppliers have signed up to our Global Sourcing
Principles, which set out our minimum requirements for conducting
business, including those of international law such as the ILO's
four fundamental principles for rights at work: no child labour, no
forced labour, no discrimination and the right to freedom of
association and collective bargaining.
For Mulberry products arriving at our warehouses in the period,
40% were sourced from suppliers we've worked with for more than ten
years and 60% from suppliers we've worked with for more than five
years.
3. Net Zero Manufacturing
Made in the UK
Our presence in the south-west of England harks back to our
beginnings in 1971. The Rookery opened in Chilcompton in 1989 and
is our centre of excellence for product development and home to our
development team, artisan studio and Lifetime Service Centre. Our
second UK factory, The Willows, opened in Bridgwater in 2013 and is
our main production site in the UK, housing seven production lines.
At The Willows and The Rookery, we employ more than 350 people.
Craftspeople joining follow a comprehensive training programme that
equips them with the skills needed to craft Mulberry bags, whether
that's cutting leather, edge inking, stitching or quality
inspection.
Both The Rookery and The Willows have been carbon-neutral since
2019 and we generate a portion of the electricity for The Willows
from solar panels on the roof. Both sites work with partners who
ensure no unrecyclable waste goes to landfill and is recovered as
energy instead. The cutting machines we use minimise our cutting
waste and we donate any unusable leather offcuts to local craft
Groups, schools and scrap stores. We regularly host educational
tours for colleges and university classes.
Water and chemical management
Our manufacturing chain requires tanning agents, adhesives and
cleaning products. We ensure our suppliers follow strict
chemical-management practices and also maintain our own
restricted-substance list set to the strictest legal limits in the
markets where we sell our products.
We used World Wildlife Fund's Water Risk Filter to map our water
consumption and risk for both our UK factories. Currently we are
classed as low risk. To help us remain at this level, we use a
rainwater harvesting tank at The Rookery for toilet flushing.
4. Product Circularity
The Mulberry Exchange
We create Mulberry bags to last a lifetime and be handed down to
the next generation. However, we also believe a change or exchange
can be positive. We launched The Mulberry Exchange in 2020 to
restore Mulberry classics authentically for a new owner, while
giving customers the chance to return their pre-loved bags in
exchange for credit towards a new purchase.
We sell the restored bags in stores and online and were one of
the first brands to use re-sale platform Vestiaire Collective,
which showcases and sells second-hand limited-edition and rare
pieces.
Repairs and restoration
The team at the Lifetime Service Centre at The Rookery are
masters of restoration, breathing new life into thousands of
pre-loved Mulberry items every year. If an item is beyond repair,
we will offer to buy it back and reclaim the energy through
Scottish Leather Group, who have a thermal energy-reclamation
plant.
Waste and recycling
In the UK, we work with providers such as Biffa and First Mile
to process any non-recyclable waste that would traditionally go to
landfill, to create electricity for the National Grid. We send our
mixed recycling for sorting so it can be reprocessed into new
products.
We have a zero-tolerance policy on destroying quality goods. We
divert unsold seasonal stock to our global network of outlet stores
and also hold an annual employee sale of samples and stock, with
proceeds added to our Somerset Community Fund, or other charitable
causes.
We create our green carrier bags from cupcycling, an innovative
technology that repurposes coffee cups into paper, while also
separating the cups' plastic lining for recycling. Since we
started, we have repurposed over 2.8 million coffee cups that would
otherwise have been sent to landfill.
All our customer-facing packaging will be recyclable by the end
of 2022. We are also working to reduce the amount of cardboard we
use for packaging and to eliminate all plastic from our
business-to-business operations. In addition, we are currently in
the process of changing our ribbon and handles for our carrier bags
to a material that will be compostable and biodegradable.
5. Inclusive Communities
Culture and wellbeing
All our employees are ambassadors for Mulberry and we encourage
them to live our employee values, which we believe help foster a
culture of wellbeing and acceptance, where everyone is celebrated
for their individuality. In our culture and environment, all
employees can thrive, irrespective of their gender identity, sexual
orientation, marital and civil partnership status, parental status,
race or ethnicity, religion or religious belief, political opinion,
physical appearance, age or disability. All our employees can
access our intranet - The Tree - where we post company information,
updates and employee achievements and encourage communication.
Diversity, equity and inclusion
To ensure we are successful in creating this environment for our
employees, our Diversity, Equity and Inclusion (DE&I) Committee
meets regularly to discuss our DE&I Strategy, as well as
current news, personal experiences and those of our colleagues. The
committee also works with the marketing department to create a
communications calendar, recognising key moments such as
International Women's Day, Mental Health awareness, Pride and Black
History Month. This helps us reflect on and celebrate the success
of our diverse employees.
Gender equality
Since the publication of our last Gender Pay Gap Report, we have
seen notable improvement in both our median and mean hourly pay
gap. Comparing our gender pay gap results with industry data we see
that our median results are significantly better than the Office
for National Statistics (ONS) benchmark. Mulberry's median hourly
pay gap is in favour of women at -5.2% compared to ONS benchmark at
8.3% in favour of men.
Our Management Board and Senior Leadership Team is weighted
towards women.
Living Wage Employer
We are proud to be an accredited Living Wage Employer. This
means that all UK employees will earn higher than the Government's
minimum or National Living Wage. Living Wage is an independently
calculated hourly pay rate based on the actual cost of living,
calculated each year by the Living Wage Foundation. We continue to
use available global benchmarks and insights to ensure our global
employees earn a living wage comparable with their location.
Apprenticeships
Since 2006, we have operated a leather goods manufacturing
apprenticeship programme in conjunction with Bridgwater and Taunton
College, which we run at The Willows and The Rookery.
In 2017, we were Lead Employer in a national trailblazer Group,
developing the Level 2 Leather Craftsperson Standard
apprenticeship, which has since become industry-recognised,
offering graded results for apprentices in the leather goods'
industries.
Our Leather Goods Manufacturing apprenticeship programme
continues to support the upskilling of workers into the leather
goods industry and in the period saw us employ 4 new apprentices
into the scheme. The programme has been reinvigorated to encourage
cross functional learning across several departments within
Mulberry, expanding the apprentices experience and providing more
exposure to the business.
Our progress so far
Leather
-- For the Spring Summer 23 season, all of our leather, suede
and nappa is sourced from tanneries with environmental
accreditations (Autumn Winter 22: 88%)
-- Over 5 years, we worked with our tannery partners whilst they
improved their environmental standards and achieved certification,
stimulating positive change within the leather industry - as well
as onboarding new tanneries with existing certificates
-- We are a founding partner of the Sustainable Leather
Foundation and members of Leather Working Group since 2012
Link to theme 2
Other low-impact materials
-- All nylon sourced as 100%-certified recycled nylon or ECONYL since Spring 2020
-- Launch of our Softie outerwear capsule in September 2022,
using recycled silk padding and recycled nylon outer
-- Continue to represent low impact materials throughout our
collections, including ECONYL, bio-acetate and Eco-Scotchgrain
Link to theme 2
Carbon
-- All UK operations carbon-neutral since 2019. This is achieved
by supporting World Land Trust's Carbon Balanced programme which
empowers local communities while tackling climate change and
biodiversity loss
-- Signatory of UN Fashion Industry Charter for Climate Action
-- In February 2023 we submitted our carbon reduction targets to
the Science Based Targets (SBTi)
Link to theme 1, 3
Product circularity
-- Launched circular resell and buy-back programme, The Mulberry Exchange, in February 2020
-- Launched on Vestiaire Collective's Brand Approved programme in March 2021
-- Launched on London based rental platform HURR in June 2022
-- Lifetime Service Centre restored over 12,000 bags in FY 2022-23
Link to theme 4
Packaging
-- Cupcycling introduced into customer packaging in January
2020, repurposing over 3.2 million coffee cups to make Mulberry
Green paper
-- All our paper and card is FSC certified
Link to theme 4
People and community
-- We grant all employees two days of paid volunteering each year
-- We have raised GBP18,906 in the period for The Felix Project
and their Empty Plate Emergency Appeal. This equates to 81,432
meals.
-- Ongoing partnership with World Land Trust, our environmental charity partner
-- In September 2021, we began a long-term partnership and set
up a charitable fund with Somerset Community Foundation to help
people in Somerset through funding local charities, Groups and
communities, inspiring giving and philanthropy
-- Mulberry donated GBP50,000 to the Red Cross Ukraine Appeal,
as well as match-funding various employee led fundraising
activities
-- In February 2023 Mulberry made a GBP20,000 donation to the
British Red Cross to assist the earthquake relief efforts in Turkey
and Syria
-- We continue to manufacture over half of our bags in the UK
and invest in our thriving apprenticeship programme and Next
Generation retail concept.
Link to theme 5
GOING CONCERN
In determining whether the Group's accounts can be prepared on a
going concern basis, the Directors considered the Group's business
activities and cash requirements together with factors likely to
affect its performance and financial position. The going concern
period reviews the 12-month period from the date of this
announcement to end of June 2024.
Whilst the Directors have not identified a material uncertainty
in respect of going concern, there were significant judgements
applied in reaching this conclusion. The key judgements made in the
going concern assessment are in relation to the more challenging
trading environment due to macro-economic uncertainty, along with
ongoing disruption in key markets, as demonstrated with the recent
lockdowns in China. The Directors considered the outlook for the
Group against their detailed base case scenario. The Directors have
also considered a reverse stress test scenario and compared this to
a reasonable worse case downside scenario. These are described in
further detail below.
The Group had net cash of GBP0.7m (2022: GBP25.7m) at 1 April
2023 which included a GBP4.0m drawdown on its revolving credit
facility (RCF).
Borrowing facilities
The Group has a GBP15.0m RCF with security granted in favour of
HSBC banking, which has been extended for a further four-year
period to 30 September 2027. Covenants are tested on a quarterly
basis and contain a net debt to EBITDA ratio and a fixed charge
cover ratio. Covenants are tested on a 'frozen GAAP' basis and
exclude the impact of IFRS 16 and SaaS costs. In addition, the
Group has a GBP4.0m overdraft facility and a further USD1.9m
overdraft facility in China which is currently capped at USD0.5m,
which are not committed facilities and therefore not considered by
the Directors as part of the going concern assessment. The Group
overdraft is renewed annually and the overdraft in China is renewed
annually in July.
The RCF was drawn down by GBP4.0m at the period end and this
increased to GBP12.0m at the date of this report. The Group had net
debt of GBP8.8m at 23 June 2023.
Base case scenario
The Directors' base case scenario assumes that revenue will
increase by 10.8% versus 2022/23 with growth primarily driven by
the full year impact of 2022/23 initiatives of Sweden and
Australia. Caution has been applied on the UK and China markets
reflecting a level of uncertainty. The Directors compared the base
case scenario against external analysis which supported our
strategic approach and growth plans, including market
opportunities.
The budget includes cost increases relating to inflationary cost
pressure and to support system transformation projects to drive
efficiencies and improve conversion, as well as investment behind
strategic growth initiatives.
Under this scenario, banking covenants will be met however it is
anticipated an element of the RCF will continue to be required
between April 2023 and June 2023.
Reverse stress test and downside scenario
The Directors have considered a plausible but remote downside
scenario, which models out the risk in the UK and South Korea,
which are considered the main regions which could impact full-year
revenue. The impact of this would result in a 5.5% reduction in
Group revenue against the base case scenario and further mitigating
actions are available.
The Directors have prepared a reverse stress test scenario that
models the decline in sales that the Group would be able to absorb
before triggering a breach of banking covenants. It should be noted
that the RCF is not forecast to be fully drawn down under the
reverse stress test. The Directors believe that this scenario is
remote, for the following reasons:
-- Current trading is outperforming the reverse stress
assumptions. This is anticipated to continue;
-- Revenue in this scenario would be below the level achieved in
2022/23, with current trading above last year;
-- Despite the fall in revenue in this scenario, the RCF would
not be fully drawn although available to the Group throughout the
going concern period; and
-- If trading was to be challenging over the key trading
periods, there is time to react and take further mitigating actions
before the covenant is breached in June 2024, including further
discretionary cost savings and an increase in mark-down sales to
clear stock. We retain a good working relationship with our
bankers, HSBC and would look for a relaxation of bank
covenants.
The reverse stress test shows that Group revenue could fall by
14.0% versus the base case scenario before the leverage covenant is
breached in June 2024. However once mitigating actions are applied
this increases to 17.2%.
Under this scenario, the RCF is not fully drawn so would still
be available to the Group throughout the 12-month going concern
period, however, the leverage covenant would be breached in June
2024. Whilst the Directors believe that this scenario is remote, it
would allow time for further actions to be taken, including a
possible further relaxation of banking covenants. Whilst there is
no guarantee that this will be agreed, the Group currently
maintains a good relationship with our bankers, HSBC.
Going concern basis
Based on the assessment outlined above, the Directors have a
reasonable expectation that the Group has access to adequate
resources to enable it to continue to operate as a going concern
for the foreseeable future. For these reasons, the Directors
consider it appropriate for the Group to continue to adopt the
going concern basis of accounting in preparing the Annual Report
and financial statements.
Group income statement
52 WEEKSED 1 APRIL 2023
52 weeks 53 weeks
ended ended
1 April 2 April
2023 2022
GBP'000 GBP'000
Revenue 159,129 152,411
Cost of sales (45,879) (43,106)
--------- --------
Gross profit 113,250 109,305
Impairment charge relating to intangibles (2,366) -
Impairment credit relating to property, plant
and equipment 850 -
Impairment credit relating to right-of-use
assets 12,949 -
Other operating expenses (108,485) (85,878)
Other operating income 776 1,220
--------- --------
Operating profit 16,974 24,647
Share of results of associates 52 127
Finance income 11 19
Finance expense (3,887) (3,467)
--------- --------
Profit before tax 13,150 21,326
Tax (1,753) (2,157)
--------- --------
Profit for the period 11,397 19,169
--------- --------
Attributable to:
Equity holders of the parent 13,243 19,985
Non-controlling interests (1,846) (816)
--------- --------
Profit for the period 11,397 19,169
--------- --------
Basic profit per share 19.1p 32.2p
Diluted profit per share 19.1p 32.2p
All activities arise from continuing operations.
Group statement of comprehensive income
52 WEEKSED 1 APRIL 2023
52 weeks 53 weeks
ended ended
1 April 2 April
2023 2022
GBP'000 GBP'000
Profit for the period 11,397 19,169
Items that may be reclassified subsequently to
profit or loss
Exchange differences on translation of foreign
operations (483) (116)
Total comprehensive income for the period 10,914 19,053
-------- --------
Attributable to:
Equity holders of the parent 12,888 19,954
Non-controlling interests (1,974) (901)
-------- --------
Total comprehensive income for the period 10,914 19,053
-------- --------
Group balance sheet
AS AT 1 APRIL 2023
1 April 2 April
2023 2022
GBP'000 GBP'000
Non-current assets
Intangible assets 6,015 6,056
Property, plant and equipment 19,817 14,618
Right-of-use assets 57,520 32,221
Interests in associates 254 335
Deferred tax asset 622 2,148
--------- --------------
84,228 55,378
--------- --------------
Current assets
Inventories 48,250 36,783
Trade and other receivables 19,901 15,927
Cash and cash equivalents 6,872 25,669
--------- --------------
75,023 78,379
--------- --------------
Total assets 159,251 133,757
--------- --------------
Current liabilities
Trade and other payables (28,143) (24,975)
Current tax liability (182) (2,382)
Lease liabilities (10,932) (11,108)
Borrowings (11,562) (3,278)
--------- --------------
(50,819) (41,743)
--------- --------------
Net current assets 24,204 36,636
--------- --------------
Non-current liabilities
Lease liabilities (61,666) (52,547)
Borrowings - (1,721)
--------- --------------
(61,666) (54,268)
Total liabilities (112,485) (96,011)
--------- --------------
Net assets 46,766 37,746
--------- --------------
Equity
Share capital 3,004 3,004
Share premium account 12,160 12,160
Own share reserve (896) (1,269)
Capital redemption reserve 154 154
Foreign exchange reserve 675 1,158
Retained earnings 38,110 27,006
Equity attributable to holders of the parent 53,207 42,213
Non-controlling interests (6,441) (4,467)
--------- --------------
Total equity 46,766 37,746
--------- --------------
The financial statements of Mulberry Group plc (company number
01180514) were approved by the Board of Directors and authorised
for issue on 27 June 2023.
They were signed on its behalf by:
Thierry Andretta Charles Anderson
Director Director
Group statement of changes in equity
52 WEEKSED 1 APRIL 2023
Share Own Capital Foreign
Share premium share redemption exchange Retained Non-controlling Total
capital account reserve reserve reserve earnings Total interests equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at
27 March 2021 3,004 12,160 (1,277) 154 1,274 6,957 22,272 (3,566) 18,706
----------------- ------------ ------------ ----------- ------------ ----------- ------------ ------- --------------- -------
Profit/(loss)
for the period - - - - - 19,985 19,985 (816) 19,169
Other
comprehensive
expense for
the period - - - - (116) - (116) - (116)
Total
comprehensive
(expense)/income
for the period - - - - (116) 19,985 19,869 (816) 19,053
Charge for
employee
share-based
payments - - - - - 69 69 - 69
Own shares - - 8 - - - 8 - 8
Exercise of
share options - - - - - (5) (5) - (5)
Non-controlling
interest foreign
exchange - - - - - - - (85) (85)
Balance at
2 April 2022 3,004 12,160 (1,269) 154 1,158 27,006 42,213 (4,467) 37,746
------------ ------------ ----------- ------------ ----------- ------------ ------- --------------- -------
Profit/(loss)
for the period - - - - - 13,243 13,243 (1,846) 11,397
Other
comprehensive
expense for
the period - - -- - (483) - (483) - (483)
Total
comprehensive
(expense)/income
for the period - - -- - (483) 13,243 12,760 (1,846) 10,914
Charge for
employee
share-based
payments - - - - - 23 23 - 23
Own shares - - 346 - - - 346 - 346
Exercise of
share options - - - - - (346) (346) - (346)
Impairment
of shares
in trust - - 27 - - (27) - - -
Non-controlling
interest foreign
exchange - - - - - - - (128) (128)
Dividends
paid - - - - - (1,789) (1,789) - (1,789)
Balance at
1 April 2023 3,004 12,160 (896) 154 675 38,110 53,207 (6,441) 46,766
------------ ------------ ----------- ------------ ----------- ------------ ------- --------------- -------
Group cash flow statement
52 WEEKSED 1 APRIL 2023
52 weeks 53 weeks
ended ended
1 April 2 April
2023 2022
GBP'000 GBP'000
Operating profit for the period 16,974 24,647
Adjustments for:
Depreciation and impairment of property, plant
and equipment 3,487 3,702
Depreciation and impairment of right-of-use
assets (5,021) 6,682
Amortisation and impairment of intangible assets 4,041 1,778
Gain on lease modification and lease disposals (441) (2,160)
Loss on sale of property, plant and equipment 96 38
Business combination gain (304) -
Profit on disposal of intangible assets - (5,343)
Own shares transferred from trust - 8
Share-based payments expense 23 69
-------- --------
Operating cash inflows
before movements in working capital 18,855 29,421
Increase in inventories (9,722) (5,400)
Increase in receivables (3,974) (3,318)
Increase in payables 2,001 2,136
-------- --------
Cash generated from operations 7,160 22,839
Income taxes paid (2,427) (154)
Interest paid (3,899) (3,470)
-------- --------
Net cash inflow from operating activities 834 19,215
-------- --------
Investing activities:
Interest received 15 19
Acquisition of businesses (3,182) -
Purchases of property, plant and equipment (7,129) (4,419)
Proceeds from disposal of property, plant and
equipment 2 59
Acquisition of intangible assets (3,919) (897)
Dividend received from associate 40
Proceeds from disposal of intangible assets - 13,316
Net cash (used in)/ generated from investing
activities (14,173) 8,078
-------- --------
Financing activities:
Increase in loans from non-controlling interests 246 313
New borrowings 6,100 -
Dividends paid (1,789) -
Principle elements of lease payments (10,261) (13,736)
Settlement of share awards - (5)
-------- --------
Net cash used in financing activities (5,704) (13,428)
-------- --------
Net (decrease)/increase in cash and cash equivalents (19,043) 13,865
-------- --------
Cash and cash equivalents at beginning of period 25,669 11,820
Effect of foreign exchange rate changes 246 (16)
-------- --------
Cash and cash equivalents at end of period 6,872 25,669
-------- --------
Cash and cash equivalents comprise cash and short-term bank
deposits with an original maturity of three months or less. The
carrying amount of these assets at the end of the reporting period
as shown in the consolidated statement of cash flows can be
reconciled to the related items in the Consolidated balance sheet
position as shown above. Cash and cash equivalents does not include
bank overdrafts that are not integral to the cash management of the
Group.
1. GENERAL INFORMATION
Mulberry Group plc is a public company, limited by shares,
incorporated in the United Kingdom under the Companies Act 2006 and
is registered in England and Wales.
These financial statements are presented in pounds Sterling
because that is the currency of the primary economic environment in
which the Group operates.
2. ADOPTION OF NEW AND REVISED STANDARDS
New and amended standards adopted by the Group
In the current period, the Group has applied a number of
amendments to IFRS Standards issued by the International Accounting
Standards Board (IASB) that are mandatorily effective for an
accounting period that begins on or after 1 January 2023. Their
adoption has not had any material impact on the disclosures or on
the amounts reported in these financial statements.
At the date of approval of these financial statements, the Group
has not applied any new and revised IFRS Standards that have been
issued but are not yet effective.
The Directors do not expect that the adoption any Standards
which have been issued but not yet effective to have a material
impact on the financial statements of the Group in future
periods.
3. SIGNIFICANT ACCOUNTING POLICIES
Basis of accounting
The financial statements have been prepared in accordance with
UK-adopted International Accounting Standards in conformity with
the requirements of the Companies Act 2006.
For the period ended 1 April 2023, the financial period runs for
the 52 weeks to 1 April 2023 (2022: 53 weeks ended 2 April
2022).
The financial statements are prepared under the historical cost
basis except for financial instruments that are measured at fair
values at the end of each reporting period as explained in the
accounting policies below. The principal accounting policies
adopted are set out below.
Going concern
The Directors have, at the time of approving the financial
statements, a reasonable expectation that the Company and the Group
have adequate resources to continue in operational existence for
the foreseeable future. As a result, they continue to adopt the
going concern basis of accounting in preparing the financial
statements.
4. BUSINESS AND GEOGRAPHICAL SEGMENTS
IFRS 8 requires operating segments to be identified on the basis
of internal reports about components of the Group that are
regularly reviewed by the Chief Operating Decision Maker (CODM),
defined as the Board of Directors, to allocate resources to the
segments and to assess their performance. Inter-segment pricing is
determined on an arm's length basis. The Group also presents
analysis by geographical destination and product categories.
(a) Business segment
The Group continues to extend its omni-channel network in order
to support the Group's global growth ambitions. Mulberry has thus
become increasingly reliant on individual market-level
profitability metrics to enable them to make timely market-centric
decisions that are operational and investment in nature. It is
therefore appropriate for the segmental analysis disclosures to be
a regional view of segments (being UK, Asia Pacific and Other
International) to reflect the current business operations and the
way the business internally reports and the information that the
CODM reviews and makes strategic decisions based on its financial
results.
The principal activities are as follows:
The accounting policies of the reportable segments are the same
as described in the Group's financial statements. Information
regarding the results of the reportable segment is included below.
Performance for the segment is assessed based on operating
profit/(loss).
The Group designs, manufactures and manages the Mulberry brand
for the segment and therefore the finance income and expense are
not attributable to the reportable segments.
Group income statement
52 weeks ended 1 April 2023
Asia Other
UK Pacific International Eliminations Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue
Omni-Channel 171,615 27,234 13,073 (77,677) 134,245
Wholesale 4,918 4,254 15,712 24,884
Total revenue 176,533 31,488 28,785 (77,677) 159,129
--------- -------- -------------- ------------ -------
Segment profit/(loss) 533 (1,222) 12,398 11,709
--------- -------- -------------- -------
Central costs (5,374)
Store closure credit 205
Impairment of property,
plant and equipment 850
Impairment of right-of-use
assets 12,949
Impairment of intangible (2,366)
Australia acquisition costs (806)
Sweden acquisition costs (193)
Operating profit 16,974
Share of results of associates 52
Finance income 11
Finance expense (3,887)
Profit before tax 13,150
-------
Asia
UK Pacific Other International Central Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Segment capital expenditure 7,866 1,101 1,731 138 10,836
Segment depreciation and
amortisation net of impairment (6,142) 4,942 1,747 1,960 2,507
Segment assets 108,065 27,812 14,539 8,213 158,629
Segment liabilities 72,006 16,312 13,877 10,290 112,485
Group income statement
53 weeks ended 2 April 2022
Asia Other
UK Pacific International Eliminations Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue
Omni-Channel 163,727 27,551 11,849 (72,960) 130,167
Wholesale 3,968 3,862 14,414 22,244
Total revenue 167,695 31,413 26,263 (72,960) 152,411
------- -------- -------------- ------------ -------
Segment profit/(loss) 10,297 (232) 7,356 17,421
------- -------- -------------- -------
Central costs 469
Store closure credit 6,757
Operating profit 24,647
Share of results of associates 127
Finance income 19
Finance expense (3,467)
Profit before tax 21,326
-------
Asia
UK Pacific Other International Central Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Segment capital expenditure 2,216 2,321 1,000 71 5,608
Segment depreciation and
amortisation 8,639 954 565 2,004 12,162
Segment assets 89,026 20,707 11,701 10,175 131,609
Segment liabilities 61,660 8,221 13,597 12,511 95,989
For the purposes of monitoring the segment performance and
allocating resources the Chief Operating Decision Maker, which is
deemed to be the Board, monitors the tangible, intangible and
financial assets. All assets are allocated to the reportable
segment.
(b) Product categories
Leather accessories account for over 90% of the Group's
revenues, of which bags represent over 70% of revenues. Other
important product categories include small leather goods, shoes,
soft accessories and women's ready-to-wear. Net asset information
is not allocated by product category.
5. ALTERNATIVE PERFORMANCE MEASURES
A reconciliation of reported profit before tax to underlying
profit before tax is set out below;
52 weeks 53 weeks
ended ended
1 April 2 April
Reconciliation to underlying profit 2023 2022
before tax: GBP'000 GBP'000
Profit before tax 13,150 21,326
Store closure credit (205) (6,757)
Impairment credit related to property,
plant and equipment (850) -
Impairment credit related to right-of-use
assets (12,949) -
Impairment charge related to intangibles 2,366 -
Australia acquisition costs 806 -
Sweden acquisition costs 193 -
Underlying profit before tax - non-GAAP
measure 2,511 14,569
---------------- -----------------
Adjusted basic earnings per share 5.8p 24.8p
Adjusted diluted earnings per share 5.8p 24.8p
In reporting financial information, the Group presents
Alternative Performance Measures ("APMs"), which are not defined or
specified under the requirements of IFRS. The Group believes that
these APMs, which are not considered to be a substitute for, or
superior to, IFRS measures, provide stakeholders with additional
helpful information on the performance of the business. These APMs
are consistent with how the business performance is planned and
reported within the internal management reporting to the Board of
Directors. Some of these measures are also used for the purpose of
setting remuneration targets. The Group makes certain adjustments
to the statutory profit or loss measures in order to derive APMs.
Adjusting items are those items which, in the opinion of the
Directors, should be excluded in order to provide a consistent and
comparable view of the performance of the Group's ongoing business.
Generally, this will include those items that are largely one-off
and material in nature as well as income or expenses relating to
acquisitions or disposals of businesses or other transactions of a
similar nature. Treatment as an adjusting item provides
stakeholders with additional useful information to assess the
year-on-year trading performance of the Group.
Store closure costs
During the period, one UK and one international store were
closed (2022: two UK and two international stores). The stores
closure credit relates to the following items (released)/charged to
the Income Statement :-
52 weeks 53 weeks
ended ended
1 April 2 April
2023 2022
GBP'000 GBP'000
Release of lease liabilities (635) (1,323)
Profit on disposal of an intangible
asset - (5,343)
Lease exit and redundancy costs 430 (91)
(205) (6,757)
-------- --------
The disposal of the leases resulted in net cash proceeds of
GBPnil (2022:13,300,000).
Impairment charge related to property, plant and equipment and
right-of-use assets;
The fixed assets and right-of-use assets of retail stores are
subject to impairment based on whether current or future events and
conditions suggest that their recoverable amount may be less than
their carrying value. The recoverable amount of each store is based
on the higher of the value in use and fair value less costs to
dispose. Value in use is calculated from expected future cash flows
using suitable discount rates, management assumptions and estimates
on future performance. The carrying value for each store is
considered net of the carrying value of any cash contribution
received in relation to that store. For impairment testing
purposes, the Group has determined that each store is a separate
cash-generating unit (CGU). Each CGU is tested for impairment if
any indicators of impairment have been identified. The value in use
of each CGU is calculated based on the Group's latest budget and
forecast cash flows. Cash flows are discounted using the weighted
average cost of capital ("WACC") and are modelled for each store
through to their lease expiry or break date. No lease extensions
have been assumed when forecasting. The Group also tests whether
there should be any reversal of previously impaired assets. The
results of this assessment are shown in the table below :-
52 weeks 53 weeks
ended ended
1 April 2 April
2023 2022
GBP'000 GBP'000
Impairment charge related to property,
plant and equipment - 1 store (2022:
nil) 204 -
Reversal of impairment charge related
to property, plant and equipment - 1
store (2022: nil) (1,054) -
-------- --------
Net impairment credit related to property,
plant and equipment (850) -
Impairment charge related to right-of-use
assets - 2 stores (2022: nil) 773 -
Reversal of impairment charge related
to right-of-use assets - 2 stores (2022:
nil) (1) (13,722) -
(12,949) -
(1) Included within the impairment reversal credit is
GBP7,845,000 for Bond Street which was closed during the period. On
3 April 2023 the lease on this store was assigned to a third party.
Based on the future discounted cash flow savings that will benefit
the Group over the remaining life of the lease the Directors have
determined that the fair value less costs to sell of the store
right-of-use asset at 1 April 2023 was higher than its carrying
value and therefore it was appropriate to reverse GBP7,845,000 of
previously charged impairment. The balance relates to a reversal of
a previous impairment of our Regent Street store. This store has
seen improved performance post the Bond Street closure, which we
anticipate to continue.
Impairment charge related to intangibles
Goodwill represents the opportunity to grow by utilising an
established distribution network in Korea. The recoverable amount
of the goodwill is determined based on a value in use calculation
which uses cash flow projections based on financial projections
approved by the Directors and using a pre-tax discount rate of
22.3% per annum (2022: 18.4%). Acquired goodwill is regarded as
having an indefinite life and under IAS36 is not subject to
amortisation but is subject to annual tests for impairment. As a
result of this assessment the Group incurred an impairment charge
during the period of GBP2,366,000 (2022: GBPnil).
Australia acquisition costs
During the period the Group incurred costs of GBP806,000 (net of
a business combination gain of GBP304,000) on the acquisition of 5
stores in Australia.
Sweden acquisition costs
During the period the Group incurred costs of GBP193,000 on the
acquisition of 3 stores in Sweden.
6. OTHER OPERATING EXPENSES
52 weeks 53 weeks
ended ended
1 April 2 April
2023 2022
GBP'000 GBP'000
Other operating expenses have been arrived at after
charging/(crediting):
Impairment of intangible assets 2,366 -
Impairment of property, plant and equipment (850) -
Impairment of right-of-use assets (12,949) -
-------- --------
Amortisation of intangible assets 1,675 1,778
Depreciation of property, plant and equipment 4,337 3,702
Depreciation of right-of-use assets 7,928 6,682
Net foreign exchange gain (158) (57)
Store closure credit (205) (6,757)
Staff costs 44,991 40,731
Other operating expenses 49,917 39,799
-------- --------
108,485 85,878
7. EARNINGS PER SHARE ('EPS')
52 weeks 53 weeks
ended ended
1 April 2 April
2023 2022
pence pence
Basic earnings per share 19.1 32.2
Diluted earnings per share 19.1 32.2
Underlying basic earnings per share 5.8 24.8
Underlying diluted earnings per share 5.8 24.8
Earnings per share is calculated based on the following
data:
52 weeks 53 weeks
ended ended
1 April 2 April
2023 2022
GBP'000 GBP'000
Profit for the period for basic and diluted earnings
per share 11,397 19,169
Adjusting items:
Store closure credits* (203) (4,411)
Reversal of impairment charge related to property, plant
and equipment* (650) -
Reversal of impairment charge related to right-of-use
assets* (10,342) -
Impairment charge for intangible assets 2,366
Australia acquisition costs* 728 -
Sweden acquisition costs 193 -
Profit for the period for underlying basic and diluted
earnings per share 3,489 14,758
-------- --------
* These items are included net of GBP2,731,000 (2022:
GBP2,346,000) of the corresponding tax expense.
52 weeks 53 weeks
ended ended
1 April 2 April
2023 2022
Million Million
Weighted average number of ordinary shares for the
purpose of basic EPS 59.6 59.5
Effect of dilutive potential ordinary shares: share
options - -
Weighted average number of ordinary shares for the
purpose of diluted EPS 59.6 59.5
-------- --------
The weighted average number of ordinary shares in issue during
the period excludes those held by the Mulberry Group plc Employee
Share Trust.
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END
FR PPUPAQUPWPGM
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