TIDMMUL
RNS Number : 5838I
Mulberry Group PLC
10 December 2015
MULBERRY GROUP PLC ("Mulberry" or the "Group")
RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2015
Mulberry Group plc, the English luxury brand, announces its
results for the six months ended 30 September 2015.
FINANCIAL HIGHLIGHTS
-- Total revenue up 5% to GBP67.8 million (2014: GBP64.7 million)
-- Gross profit margin increased by 1.6% to 61.5% (2014: 59.9%)
-- Profit before tax GBP0.1 million (2014 Loss before tax: GBP1.1 million)
OPERATING HIGHLIGHTS
-- Digital sales increased by 20%, representing 12% of Group sales (2014: 10%)
-- Efficiency gains in our UK factories which now produce c. 50% of our handbags
CURRENT TRADING AND OUTLOOK
-- Total Retail sales for the 10 weeks to 5 December were up 4% (like-for-like up 5%)
-- 2015 Christmas video #MulberryMiracle has been viewed over 1.7 million times
-- New Creative Director, Johnny Coca, will show his first
Mulberry collection as part of London Fashion Week during February
2016
THIERRY ANDRETTA, CHIEF EXECUTIVE OFFICER, COMMENTED:
"Our strategy is beginning to deliver tangible results in line
with our expectations. We look forward to Johnny Coca's first
Mulberry collection which will emphasise our Britishness and our
heritage in leather, whilst delivering great quality within our
targeted price range. We remain committed to our UK manufacturing
base, which produces c. 50% of our handbags. We are excited about
the future and look forward to the Mulberry brand fulfilling its
potential both in the UK and internationally."
FOR FURTHER DETAILS PLEASE CONTACT:
Bell Pottinger
Daniel de Belder 020 3772 2561 / 07977 927142
Mulberry Investor Relations
Allegra Perry 020 7605 6795
Altium
Sam Fuller / Tim Richardson 020 7484 4040
Barclays
Nicola Tennent 020 3134 9801
Copies of this Half Year Report are available from the Group's
registered office and from its website www.mulberry.com.
FINANCIAL REVIEW
Sales continued to grow during the six months to 30 September
2015 and the profit before tax was ahead of the prior year
period.
Total revenue for the period was GBP67.8 million, up 5% from
GBP64.7 million last year, reflecting growth in Retail sales which
was partially offset by the expected decline in Wholesale sales.
Trading in our own Retail stores continued to grow encouragingly
throughout the period.
Retail
Retail sales have continued to grow following the momentum
gained during the second half of the year to March 2015. Retail
sales (including Digital) increased 12% (GBP5.3 million) to GBP50.4
million during the period, with like-for-like sales up 10%.
-- UK Retail sales (including Digital) were up 12%
(like-for-like up 14%) for the period to GBP40.0 million (2014:
GBP35.8 million);
-- International Retail sales (including Digital) were up 12%
(like-for-like down 3%) for the period to GBP10.4 million (2014:
GBP9.3 million). Sales in Europe have grown encouragingly,
benefitting from both positive like-for-like growth and new stores,
whilst North America was more challenging; and
-- Digital sales were up 20% to GBP7.9 million, accounting for
12% of Group sales (2014: 10%); 77% of our Digital sales were
generated in the UK and 46% of revenues were generated through
orders placed via mobile phones or tablets.
Wholesale
As anticipated, Wholesale sales declined by 11% to GBP17.4
million (2014: GBP19.6 million), reflecting conservative ordering
by our Asian partners as well as our own efforts to increase
control over distribution to independent retailers. We expect the
sales trend to continue for the short term as our partners await
the arrival of the new collections from Johnny Coca and we continue
to optimise our network.
The franchise network at 30 September 2015 included 57 partner
stores in Asia and Europe (2014: 51).
Financial
Gross margin for the six months to 30 September 2015 increased
by 1.6% to 61.5% (2014: 59.9%), reflecting the increased proportion
of sales generated in our own Retail stores and the efficiency
improvements achieved in our UK factories in Somerset.
Net operating expenses for the period increased by GBP1.7
million to GBP41.7 million (2014: GBP40.0 million), reflecting an
increase in net Retail costs for stores opened/closed (GBP1.6
million) and additional senior management (GBP1.2 million),
partially offset by reduced advertising and promotion costs due to
the phasing of spend (GBP0.7 million) and other cost reductions
(GBP0.4 million). In addition, an exceptional profit was recorded
on the sale of the leases of two stores, which was offset by the
impairment of one directly-operated store and the write down of our
contribution to a partner store that was closed after the period
end.
Profit before tax was GBP0.1 million (2014 Loss before tax:
GBP1.1 million).
The effective tax rate for the full year is expected to decline
to 48% (2014: 63%) as a result of a reduction in the European and
Canadian losses that cannot be offset against increasing UK
profits.
Capital and investment expenditure for the period was GBP2.1
million (2014: GBP12.0 million), of which GBP1.3 million related to
new stores and GBP0.5 million to investment in digital and IT
systems.
The improvement in factory efficiency is in part responsible for
the increase in inventories to GBP47.7 million from GBP39.4 million
at the start of the period. October wholesale shipments were GBP3.0
million higher than last year which enables our partners to have
more time to sell the SS16 collection.
The Group had cash of GBP4.1 million at 30 September 2015 (2014:
GBP3.6 million) which includes the GBP3.6 million received from the
disposal of the two stores.
OPERATING REVIEW
Product and Design
During the last eighteen months, our priority has been to focus
on regaining momentum within our single largest category, women's
handbags. This strategy is proving successful and looking forward,
we will apply the same approach across all product categories to
reinforce the brand's British lifestyle image.
Our new Creative Director, Johnny Coca, joined Mulberry during
July and has been working closely with the design and product
development teams to prepare the AW16 collection. During the
period, we have taken the opportunity to build our design team by
hiring new talent with specialist skills in order to enhance the
important and complementary categories of men's bags, small leather
goods, women's shoes and ready-to-wear. In particular, we are
focusing upon delivering Mulberry style and quality whilst adhering
to our well defined price positioning strategy.
We look forward to showing the first Mulberry collection under
Johnny Coca's creative direction at London Fashion Week during
February 2016. These ranges will reach our distribution network
during June 2016.
Brand and Marketing
We continue to invest in digital marketing and have upgraded our
website www.mulberry.com. Through an increased use of stories, film
and stronger visual aesthetic, the site aims to communicate our
rich brand heritage and connect with our customers.
We have followed the success of last year's tongue in cheek
Christmas video with a new offering for 2015 in our uniquely
British way. The video, #MulberryMiracle, has been viewed over 1.7
million times. Our collaboration with Georgia May Jagger enabled us
to reach new customers, whilst increasing our social media
followers.
Distribution
Our distribution strategy is to expand the business
internationally as an omni-channel brand with well-placed stores
complemented by a strong digital offering. A large proportion of
our North American and European stores have been opened relatively
recently and so in the short to medium term we will focus upon
improving their productivity with limited new store openings. We
will continue to refine our wholesale distribution focussing upon
franchise partners and brand enhancing department stores.
During the period, we opened a flagship store in Paris (and
closed our smaller store) and closed two directly-operated stores
in San Francisco, California and Short Hills, New Jersey. Our
partners opened three stores in Macau, Jakarta and Singapore whilst
closing one store in Kuwait. At 30 September 2015 Mulberry's global
store footprint was 122 stores, including directly-operated and
partner stores.
Operations
We have continued to invest in our two UK factories which employ
c. 600 people and have achieved significant improvements in
efficiency over the past 12 months. They are working at full
capacity, deliver on time and produce c. 50% of our handbags.
We have continued to develop our IT systems during the first
half and have implemented further enhancements to our omni-channel
capability including the integration of digital, in-store sales and
customer data in our UK directly-operated stores.
CURRENT TRADING AND OUTLOOK
Total Retail sales for the 10 weeks to 5 December 2015 were up
4% relative to the same period last year (like-for-like up 5%).
Retail sales have continued to grow in the second half but the
comparatives are tougher as our strategy had started to take effect
in the second half of last year. This was driven by strong growth
in our Digital business where sales increased by 18%. Digital
contributed to the continued strong performance of the UK where
total Retail sales (including Digital) during the 10 weeks rose by
6% (like-for-like up 6%).
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Whilst trading for the year to date has grown in line with our
expectations, our full year results are dependent on the next few
weeks of trading through Christmas and into January.
Retail total sales Retail like-for-like
sales*
26 weeks 10 weeks 26 weeks 10 weeks
This year vs. last to 30 Sep to 05 Dec to 30 Sep to 05 Dec
year (%) 15 15 15 15
UK Retail ** +12% +6% +14% +6%
International Retail
** +12% -6% -3% +1%
----------------------- ----------- ----------- ----------- -----------
Total Retail +12% +4% +10% +5%
----------------------- ----------- ----------- ----------- -----------
* Like-for-like defined as the year-on-year change in sales from
stores which have been trading both during the current and previous
periods
** Regional splits include digital sales
***Digital sales rose by +20% in the 26 weeks to 30 Sep 2015 and
by +18% in the 10 weeks to 5 Dec 2015
Consistent with our strategy to build on our British lifestyle
image across all of our collections, there will be an increased
investment in designing, developing and launching our AW16
collections during the six months to 31 March 2016. These
collections will reach our Retail and Wholesale networks during
June 2016 which falls within our next financial year ending 31
March 2017.
Women's ready-to-wear and shoes are a very small proportion of
our sales but have potential for growth in the future and are an
important factor in building the lifestyle image that will help
develop Mulberry internationally. After careful analysis, we have
concluded that licensing the manufacture and distribution of these
categories will enable us to deliver best in class quality whilst
achieving our target price range. We have signed a letter of intent
with high quality third party partners who have been selected based
upon their proven track record in the luxury industry.
Since the end of September we have reopened our
directly-operated store in Stansted Airport following the
redevelopment of the terminal and will be relocating our store in
Westfield White City to a larger and improved location on 11
December. We have also opened one partner store in Abu Dhabi.
We continue to focus upon improving the productivity of our
existing stores. Omni-channel remains a priority with continued
investment planned during this financial year to enhance the UK
offering and to roll-out these services to key international
markets. During November, we launched our local language website in
Germany. In addition, we will soon be rolling out the omni-channel
offer to our directly-operated stores in Europe.
Operating costs will increase during the second half, reflecting
the additional design and product development costs as explained
above, the costs of new stores opened both this year and last year,
as well as the costs relating to the new senior management
team.
Capital expenditure for the full year to 31 March 2016 is
expected to be in the region of GBP9.0 million (2015: GBP17.0
million), of which the majority will be on stores.
Consolidated income statement
Six months ended 30 September 2015
Note Unaudited Unaudited Audited
six months six months year ended
30 Sept 30 Sept 31 Mar 2015
2015 2014 GBP'000
GBP'000 GBP'000
Revenue 67,768 64,700 148,680
Cost of sales (26,083) (25,950) (58,745)
Gross profit 41,685 38,750 89,935
Other operating expenses (42,077) (40,127) (85,932)
Exceptional operating income 4 1,078 - -
Exceptional operating expenses 5 (942) - (2,662)
-------------------------------- ----- ------------ ------------ -------------
Operating expenses (41,941) (40,127) (88,594)
Other operating income 198 159 359
Operating (loss)/profit (58) (1,218) 1,700
Share of results of associates 128 100 190
Finance income 2 13 17
Finance expense (12) (5) (46)
Profit/(loss) before tax 60 (1,110) 1,861
Tax credit/(charge) 6 60 700 (3,253)
Profit/(loss) for the period 120 (410) (1,392)
============ ============ =============
Attributable to:
Equity holders of the parent 120 (410) (1,392)
============ ============ =============
Basic earnings/(loss) per
share 9 0.2p (0.7p) (2.3p)
Diluted earnings/(loss) per
share 9 0.2p (0.7p) (2.3p)
All activities arise from continuing operations.
Consolidated statement of comprehensive income
Six months ended 30 September 2015
Unaudited Unaudited Audited
six months six months year ended
30 Sept 30 Sept 31 Mar 2015
2015 2014 GBP'000
GBP'000 GBP'000
Profit/(loss) for the period 120 (410) (1,392)
Exchange differences on translation
of foreign operations (218) (436) (1,084)
Tax impact arising on above
exchange differences 44 89 (137)
------------ ------------ -------------
Total comprehensive expense
for the period (54) (757) (2,613)
============ ============ =============
Attributable to:
Equity holders of the parent (54) (757) (2,613)
============ ============ =============
Consolidated balance sheet
At 30 September 2015
Unaudited Unaudited Audited
30 Sept 30 Sept 2014 31 Mar 2015
2015 GBP'000 GBP'000
GBP'000
Non-current assets
Intangible assets 11,125 14,020 12,713
Property, plant and equipment 28,918 36,274 33,289
Interests in associates 155 120 93
Deferred tax asset 1,381 550 1,260
---------- -------------- -------------
41,579 50,964 47,355
Current assets
Inventories 47,666 39,329 39,379
Trade and other receivables 12,864 13,988 13,260
Current tax asset 110 1,199 -
Cash and cash equivalents 4,057 3,585 9,900
---------- -------------- -------------
64,697 58,101 62,539
Total assets 106,276 109,065 109,894
---------- -------------- -------------
Current liabilities
Trade and other payables (27,380) (28,639) (28,733)
Current tax liabilities - - (2,472)
---------- -------------- -------------
(27,380) (28,639) (31,205)
Total liabilities (27,380) (28,639) (31,205)
Net assets 78,896 80,426 78,689
========== ============== =============
Equity
Share capital 3,000 3,000 3,000
Share premium account 11,961 11,961 11,961
Own share reserve (1,498) (1,641) (1,601)
Capital redemption reserve 154 154 154
Special reserves - 1,467 1,467
Foreign exchange reserve (1,607) (559) (1,433)
Retained earnings 66,886 66,044 65,141
Total equity 78,896 80,426 78,689
========== ============== =============
Consolidated statement of changes in equity
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Six months ended 30 September 2015
Equity attributable to equity holders of the parent
Share Share Own Capital Special Foreign Retained Total
capital premium share reserve reserves exchange earnings
account reserve reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
As at 1 April
2014 3,000 11,961 (1,676) 154 1,467 (212) 69,264 83,958
Total comprehensive
expense for the
period - - - - - (347) (410) (757)
Charge for employee
share-based payments - - - - - - 90 90
Exercise of share
options - - - - - - 66 66
Own shares - - 35 - - - - 35
Ordinary dividends
paid - - - - - - (2,966) (2,966)
As at 30 September
2014 3,000 11,961 (1,641) 154 1,467 (559) 66,044 80,426
Total comprehensive
expense for the
period - - - - - (874) (982) (1,856)
Charge for employee
share-based payments - - - - - - 46 46
Exercise of share
options - - - - - - 33 33
Own shares - - 40 - - - - 40
As at 31 March
2015 3,000 11,961 (1,601) 154 1,467 (1,433) 65,141 78,689
Total comprehensive
expense for the
period - - - - - (174) 120 (54)
Charge for employee
share-based payments - - - - - - 259 259
Exercise of share
options - - - - - - (101) (101)
Own shares - - 103 - - - - 103
Redemption of
reserve - - - - (1,467) - 1,467 -
As at 30 September
2015 3,000 11,961 (1,498) 154 - (1,607) 66,886 78,896
========= ========= ========= ========= ========== ========== ========== ========
Consolidated cash flow statement
Six months ended 30 September 2015
Unaudited Unaudited Audited
six months six months year ended
30 Sept 2015 30 Sept 31 Mar 2015
GBP'000 2014 GBP'000
GBP'000
Operating (loss)/profit for
the period (58) (1,218) 1,700
Adjustments for:
Depreciation and impairment
of property, plant and equipment 4,104 3,462 10,300
Amortisation of intangible
assets 904 1,027 2,028
(Loss)/profit on sale of property,
plant and equipment (694) (4) 8
Loss on sale of intangible (388) - -
assets
Effects of foreign exchange 8 51 204
Share-based payments charge 259 107 155
Operating cash flows before
movements in working capital 4,135 3,425 14,395
Increase in inventories (8,346) (5,581) (5,595)
Decrease/(increase) in receivables 398 (389) 106
(Decrease)/increase in payables (634) 498 838
Cash (used in)/generated by
operations (4,447) (2,047) 9,744
Corporation taxes paid (2,599) (873) (2,103)
Interest paid (12) (5) (46)
Net cash (outflow)/inflow from
operating activities (7,058) (2,925) 7,595
-------------- ------------ ------------------
Investing activities:
Interest received 2 13 17
Purchases of property, plant
and equipment (2,036) (6,074) (10,057)
Proceeds from sales of property,
plant and equipment 2,089 9 157
Acquisition of intangible fixed
assets (335) (7,755) (8,130)
Proceeds from sales of intangible 1,495 - -
assets
Net cash generated from/(used
in) investing activities 1,215 (13,807) (18,013)
-------------- ------------ ------------------
Financing activities:
Dividends paid - (2,966) (2,966)
Settlement of share awards - (131) (130)
Net cash used in financing
activities - (3,097) (3,096)
-------------- ------------ ------------------
Net decrease in cash and cash
equivalents (5,843) (19,829) (13,514)
Cash and cash equivalents at
beginning of period 9,900 23,414 23,414
Cash and cash equivalents at
end of period 4,057 3,585 9,900
============== ============ ==================
Notes to the condensed financial statements
Six months ended 30 September 2015
1. General information
Mulberry Group plc is a company incorporated in the United
Kingdom under the Companies Act 2006. The half-year results and
condensed consolidated financial statements for the six months
ended 30 September 2015 (the interim financial statements) comprise
the results for the Company and its subsidiaries (together referred
to as the Group) and the Group's interest in associates.
The information for the year ended 31 March 2015 does not
constitute statutory accounts as defined in section 434 of the
Companies Act 2006. A copy of the statutory accounts for that year
has been delivered to the Registrar of Companies. The auditor's
report on those accounts was not qualified, did not include a
reference to any matters to which the Auditor drew attention by way
of emphasis without qualifying the report and did not contain
statements under section 498(2) or (3) of the Companies Act
2006.
The interim financial statements for the six months ended 30
September 2015, have not been reviewed or audited.
2. Significant accounting policies
The accounting policies and methods of computation followed in
the interim financial statements are consistent with those as
published in the Group's Annual Report and Financial Statements for
the year ended 31 March 2015.
At the date of approval of these financial statements, the
following Standards and Interpretations which have not been applied
in these financial statements were in issue but not yet
effective:
-- IFRS 9: Financial Instruments; and
-- IFRS 15: Revenue from Contracts with Customers.
The Directors do not expect that the adoption of this Standard
will have a material impact on the financial statements of the
Group in future periods. Beyond the information above, it is not
practicable to provide a reasonable estimate of the effect of these
Standards until a detailed review has been completed.
The Annual Report and Financial Statements are available from
the Group's website (www.mulberry.com) or from the Company
Secretary at the Company's registered office, The Rookery,
Chilcompton, Bath, England, BA3 4EH.
3. Going concern
The Group has considerable financial resources together with a
customer base split across different geographic areas and between
directly operated stores, partner stores and wholesale accounts.
The Group's forecasts and projections, taking account of reasonably
possible changes in trading performance, show that the Group should
be able to operate within the level of its current facilities. As a
consequence, the Directors believe that the Group is well placed to
manage its business risks successfully despite the uncertain
economic outlook.
After making enquiries, the Directors have a reasonable
expectation that the Company and the Group will have adequate
resources to continue in operational existence for the foreseeable
future. Accordingly, they continue to adopt the going concern basis
in preparing the half year results.
4. Exceptional operating income
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