Mulberry share price slides on H1 report

on Dec 5, 2013
Updated: Oct 21, 2019
Listen, Thursday, December 5: Shares in Mulberry Group (LON:MUL) have declined by more than two percent this morning, after the British luxury brand released its interim results for the six months ended September 30. The Bayswater and Alexa handbags maker said in a statement today that it had recorded higher UK and international half-year sales but the costs of overseas expansion had hit profit.

The company’s total revenue for the period was £78.1 million, up two percent from last year’s £76.5 million. Mulberry reported six-percent retail sales growth and four-percent like-for-like growth for the first half. UK retail sales were up five percent despite the tough economic climate, and growth in international retail sales increased by 29 percent year-on-year. Wholesale sales were five percent lower for the period, reflecting more conservative ordering by European wholesale customers – a trend, which Mulberry expects to remain for the rest of the financial year.

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***Overseas expansion weighs on profit***
Mulberry’s first-half profit before tax came in at £7.23 million, 28 percent down on the previous year’s £10.01 million. The company attributed the fall to the cost of continued investment in international expansion and increased seasonality. Despite the decline, which mirrored a similar fall in the full-year (Mulberry’s Share Price Declines as Annual Profit Drops), the group said it was on course to hit its full-year profit targets.

During the six-month period to the end of September, Mulberry opened nine new international stores and completed its second UK factory in south-west England on time and to budget, with production ramp-up going to plan.
CEO Bruno Guillon revealed that Mulberry is continuing its overseas expansion and it is on track to open 15 new stores during 2013/14, in high traffic, tourist locations particularly in North America and Asia, as it tries to take its brand more upmarket from its traditional position of “affordable luxury” and woo China’s more affluent luxury shoppers. The group, which has recently hiked prices of handbags and improved the quality of its materials, also announced that it had secured a location for a flagship store in a prime location on Rue Saint-Honoré, Paris which is scheduled to open during the 2014/15 financial year.

Mulberry’s capital expenditure for the year to the end of March 2014 is expected to be around £19 million, subject to the timing of new store openings and other investments, the company said.
On the management front, Mulberry continues its search for a new creative director after Emma Hill, who had been in the post since 2007 and who was responsible for the Alexa satchel, left in September.

Mulberry’s share price has fallen 2.15 percent so far today. According to AnalystRatingsNetwork data, four research analysts have a ‘hold’ rating for the stock and one has a ‘buy’ rating. The stock’s average rating is ‘hold’ with a consensus price target of 1,068.12p.
**As of 09:23 UTC, buy Mulberry shares at 1,024.00p.**
**As of 09:23 UTC, sell Mulberry shares at 1,009.00p.**


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