Mulberry shares jump on profit surge and expansion success

Thursday, Jun 16 2011 by
1
Mulberry shares jump on profit surge and expansion success

British luxury fashion brand Mulberry (LON:MUL) was the top riser on the Alternative Investment Market this morning after it announced a 358% rise in pre-tax profits to £23.3 million. Shares in the company jumped by 115p to 1450p. Nagging concerns about the state of the global economic recovery failed to dampen the mood, with the company reporting that the new financial year had already seen strong demand in all of its markets.

Sales at Mulberry in the 12 months to the end of March grew by 69% to £121.6 million with like-for-like retail sales up 43% to £73.5 million and wholesale shipments to third parties up 130% to £48.1 million. The performance represented an 473% increase in earnings per share to 29.8p and the company said it was proposing an 82% increase in the dividend to 4.0p per share.

Godfrey Davis, the chairman and chief executive of Mulberry, said: “Mulberry has increased sales by 69% year on year and delivered a step change in profitability. Strong demand in all markets has continued into the new financial year and the outlook for the Mulberry brand is positive. While we remain cautious about the global economic environment, we are focused on accelerating our international expansion.”

David Stoddart at FinnCap upgraded the broker’s target price to 1660p and reiterated a buy rating. He said that although the rating appeared high Mulberry’s international potential merited a substantial premium rating. He said the shares were probably not as expensive as they appeared and the broker “would not bet against the positive momentum”.

During the year Mulberry opened nine new stores in Beijing, Hong Kong, Malaysia, Korea, Qatar, UAE, the Netherlands and Sydney. It also opened a new flagship store at 50 New Bond Street, London. The company’s global expansion continued with international revenues growing 145% to £40.5 million. Meanwhile, online sales grew by 64% to £9.2 million, accounting for 8% of overall sales.

Into the new year, like-for-like retail sales were up 42% for the 10 weeks to 4 June 2011, like-for-like up 42%. With five months selling left of the autumn/winter 2011 season, third-party orders are already 38% ahead of autumn/winter 2010 total orders. Over the next 10 months, new store openings are scheduled for New York, Amsterdam, Germany, Korea, China and Bangkok.

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Mulberry Group plc designs, develops, manufactures, markets and sells products under the Mulberry brand name. The Company operates through two segments: Retail and Design. The Company's Retail segment includes sale of Mulberry branded fashion accessories, clothing and footwear through a range of shops and department store concessions. The Company's Design segment includes brand management, marketing, product design, manufacture, sourcing and wholesale distribution for the Mulberry brand. Its product range includes women's wear, accessories and footwear. It offers products under various categories, including leather accessories, such as bags; small leather goods; shoes; soft accessories, and women's ready-to-wear. The Company distributes its products through over 120 stores in approximately 30 countries; its digital site, mulberry.com, and selected wholesale partners. The Company has operations in the United Kingdom, Rest of Europe, Asia, North America and Rest of world. more »

LSE Price
273.5p
Change
0.4%
Mkt Cap (£m)
163.6
P/E (fwd)
21.5
Yield (fwd)
1.8



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