REG - Mulberry Group PLC - Half Year Results
30/11/2023 07:15
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RNS Number : 1322V Mulberry Group PLC 30 November 2023
Mulberry Group plc
Results for the twenty-six weeks ended 30 September 2023
Investments will power future growth
Mulberry Group plc (the "Group" or "Mulberry"), the British sustainable luxury
brand, announces unaudited results for the twenty-six weeks ended 30 September
2023 (the "period").
THIERRY ANDRETTA, CHIEF EXECUTIVE OFFICER, COMMENTED:
"Against a challenging macro-economic backdrop, which is impacting the entire
luxury landscape, we have continued to invest in our long-term future.
"Our strategy to transform our international businesses to a
direct-to-consumer model has enabled us to control the entire customer
experience in Sweden, Australia, New Zealand and Japan. Our investments in
the period in our digital systems, stores and product will power future
growth.
"As one of the most iconic British luxury brands, product innovation remains
at the heart of Mulberry. Our recent product launches, the Islington, Pimlico
and Lana have been well received by customers, which is testament to our
heritage, fresh designs and modern craftsmanship.
"Looking ahead, we are well placed to capitalise on the important festive
trading period and expect the usual second half weighting to trading.
"There is no doubt, however, that the macro-economic environment has
deteriorated, and this has had a knock-on effect on consumer sentiment. At
Mulberry we have ensured that we are prepared to navigate this tricky
environment, and we are confident in our ability to continue to execute our
strategy. I continue to believe that offering VAT-free shopping in the UK
would be one of the most effective ways to encourage business growth in this
country. The fact this has not been reinstated is creating challenges for all
sectors; impacting not only the luxury players, but also hospitality, travel
and tourism. As we look ahead to the New Year, I urge policy makers to
collaborate with all industries campaigning on this issue and reconsider
implementing this to support businesses across the UK."
Financial Highlights
· Group revenue up 7% (8% CER(1)) to £69.7m (2022: £64.9m)
o UK retail sales although impacted by the broader economic environment,
increased 6% to £36.2m (2022: £34.1m)
o International retail sales increased 34% (35% CER) to £23.5m (2022:
£17.5m), supported by our strategy to bring in-house ownership of overseas
stores including Sweden and Australia
o Revenue in the US increased by 38% (42% CER) due to increased brand
awareness
o Asia Pacific retail sales (including the first full period of ownership of
our Australian stores) increased by 13% (18% CER) to £13.5m (2022: £11.9m).
Underlying retail sales decreased by 7% (3% CER) due to the challenging China
macro-economic climate and reduced footfall across the region
· Gross margin of 69% (2022: 71%) was slightly below the prior
period
· Underlying loss before tax of £12.3m (2022: underlying loss
before tax £2.8m)(2) included £3.3m (2022: £0.8m) of Software as a Service
(SaaS) costs, the additional operational costs of our new stores in Sweden and
Australia, and additional important investments for future growth in the Group
· Reported loss before tax of £12.8m (2022: loss before tax
£3.8m)
Operating Highlights
· Digital sales represented 29% of total Group revenue in the period
(2022: 25%), demonstrating the continuing trend towards omni-channel shopping
in all regions
· Our collaborations with Paul Smith, Axel Arigato and Stefan Cooke
drove further global awareness of the Mulberry brand
· New stores opened in Italy, China and South Korea
· Product innovation continued in the period with the launch of new
bag families including the Islington and the Retwist
· Ongoing investment in projects to update the Group's legacy
systems and build on our omni-channel capabilities
Sustainability Highlights
· Continued focus on embedding sustainability and circularity
across the entire business
· Mulberry Pre-Loved, our buy back and resale programme, generated
sales above the same period last year
· 100% of leather (including all suede and nappa linings) for Bags,
Mini Bags and Small Leather Goods is sourced from tanneries with an
environmental accreditation. We continue to offset the carbon emissions
related to leather purchases
· Lifetime Service Centre at The Rookery continues to restore more
than 10,000 bags a year
Current Trading
· The wider macro-economic environment and geo-political climate
continues to present some uncertainty, but we are well positioned to navigate
this given our beautifully crafted product, made in our Somerset factories and
sold at the best value price point in the luxury market
· Mulberry has a clear customer proposition and plan for growth and
we remain confident in our ability to navigate this uncertainty and execute
this strategy for the benefit of all our stakeholders
· Since period end, we launched two new bag families globally, the
Lana and the Pimlico which are performing well
· Well prepared for the second half of the financial year, which is
weighted in trading given the important festive trading period and further
emphasised by our move from wholesale to retail
FOR FURTHER DETAILS PLEASE CONTACT:
Mulberry
Charles
Anderson
Tel: +44 (0) 20 7605 6793
Headland (Public Relations)
Lucy Legh / Joanna clark
Tel: +44 (0) 20
3805 4822
mulberry@headlandconsultancy.com
HOULIHAN LOKEY UK LIMITED (FINANCIAL ADVISER AND NOMAD)
Tim Richardson
Tel: +44 (0) 20 7484 4040
Notes
1 Constant Exchange Rates
2 See note 2 for more details of alternative performance measures and one off
costs
OVERVIEW
Despite the current uncertain global economic climate, which continues to
dampen consumer confidence, Mulberry continues to invest in its long-term
future. Our strategic goals are clearly set out in our strategic pillars -
omni-channel distribution, international development, constant innovation and
sustainable lifecycle - and will make us more efficient, more customer focused
and enable growth. Over the six months to 30 September 2023, we made good
progress towards all of them.
We invested in new lines, collaborations and extended ranges. For example,
collaborations with Swedish lifestyle label Axel Arigato in April and Stefan
Cooke in September introduced us to a new generation of customers; and working
with UK heritage brand Paul Smith drove new customer sales. Further innovation
came with new bag ranges - the Islington and the Retwist. With two more
launched since period end - the Pimlico and the Lana.
Pop ups continue to allow us efficiently to reach new audiences, with Leccio
giving us invaluable insights into the Italian market.
International sales represented 39% of total retail revenues, supported by our
strategy to bring in-house ownership of overseas stores. This is the first
full six-month period during which our stores in Sweden and Australia have
been fully owned; our stores in New Zealand and Japan have been fully owned
since June 2023. We experienced strong growth in retail sales in the United
States, up 38% (42% CER) as we continued to build brand awareness in this
market. In Asia Pacific overall retail sales increased by 13% (18% CER) to
£13.5m (2022: £11.9m), this period includes six months of our newly acquired
stores in Australia. Underlying retail sales in Asia Pacific decreased by 7%
principally due to the challenging macro-economic climate in China and reduced
footfall across the region. We continue to develop our lifestyle range for the
second half of the financial year and expect lifestyle sales to continue to
grow throughout the remainder of the financial year.
Central to Mulberry's business model is sustainability and circularity.
Projects incorporating and promoting pre-loved performed well, and we have
made progress in lowering further our already below-industry-average carbon
footprint through our hyper-local, hyper-transparent farm-to-finished-product
model. We expect validation of our science-based greenhouse gas emissions
reduction targets by the end of this financial year.
Group revenue increased by 7% (9% CER) over the period, with a slight decline
in the gross margin to 69% (2022: 71%). An underlying loss before tax for the
period of £12.3m (2022: loss before tax of £2.8m) reflects the additional
investments and costs to support business growth, including SaaS costs and the
additional operational costs of our stores in Sweden and Australia. We ended
the period with net borrowings of £13.6m(1) (2022: net borrowings £0.5m).
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.
BOARD CHANGES
Appointment of additional Independent Non-Executive Director
On 7 September 2023, the Group appointed Ms Leslie Serrero as an additional
Independent Non-Executive Director. Ms Serrero will also sit on the Audit
Committee of the Board.
Ms Serrero has extensive experience of luxury brand leadership. She has been
International Managing Director of US luxury group Casa Komos Brands Group
since October 2022, having previously held senior executive roles at Fendi
France (2019-2022), Christian Dior Couture (2012-2019) and Lacoste SA
(2009-2012). Prior to this, Ms Serrero was a project leader at Boston
Consulting Group for six years, advising companies in the retail, consumer and
fashion sectors on transformation and growth strategies.
CURRENT TRADING AND OUTLOOK
Since the period end, we have launched two new bag families globally, the Lana
and the Pimlico, which have both performed well.
The wider macro-economic environment, including inflationary pressures,
continues to present some uncertainty, but we are well positioned as the best
value price point in the luxury market and prepared for the second half of the
financial year, which is weighted in trading given the important festive
trading period and further emphasised by our move from wholesale to retail.
Mulberry has a clear customer proposition and plan for growth and we remain
confident in our ability to navigate this uncertainty and execute this
strategy for the benefit of all our stakeholders.
Notes
1 Net borrowings comprises cash balances of £5.9m (2022: £6.5m) less bank
borrowings of £19.5m (2022: £7.0m), which excludes related parties and
non-controlling interest of £4.5m (2022: £5.6m)
PROGRESS AGAINST OUR STRATEGY
With a rich heritage in leather craftmanship and a reputation for innovation,
we aim to build Mulberry as the British sustainable global luxury brand
through four strategic growth pillars.
Strategic pillar 1 - Omni-channel distribution
The period saw us invest in our ongoing digital transformation to enhance our
omni-channel distribution. Our new omni-hubs in Glasgow, Bath and London's
Regent Street take the majority of omni-orders. They also optimise store space
and are already making order management more efficient. The payback is clear:
digital sales as a proportion of the Group revenue continued to rise - up 4%
to 29% in the period. We launched the Mulberry Mindset strategy in June to
help staff provide memorable interactions for customers and build authentic
relationships.
Refurbishments and pop ups in London, Europe and Asia also rewarded
investment, helping us reach new audiences and lift sales.
Strategic pillar 2 - International development
We continued to optimise our digital channels and global store network,
focusing on the US and Asia Pacific with their strong growth opportunities,
bringing more stores and concessions in-house to better control pricing and
distribution.
In the US, increasing brand awareness, helped to drive sales up 38% (42% CER).
Asia Pacific retail sales, including the first full period of ownership of our
Australian stores, increased by 13% (18% CER). Underlying retail sales
decreased by 7% (3% CER) due to the challenging China macro-economic climate
and reduced footfall across the region. Of note was our Chinese Valentine's
Day event at newly opened Nanjing Deji store with actress Zhu Zhu. This
boosted sales and brand awareness, with the Bayswater bag performing
particularly well.
In addition to Australia, the period saw the first full six-month contribution
of stores and concessions in Sweden; the New Zealand store and stores and
concessions in Japan became wholly owned in May and June respectively.
In Europe, our six-month pop up in the luxury outlet Mall Firenze, Leccio, is
giving us valuable insight into the Italian market and performing well.
Strategic pillar 3 - Constant innovation
Mulberry has a long tradition of innovation and collaboration as it adapts to
changing customer tastes and reaching new markets. Further innovation came
from new bag ranges - the Islington and the Retwist - as well as new
silhouettes for the Bayswater, Mini Lily and North South Tote. Stand out
performances came from Bayswater Powder Rose and Pale Grey. With the Pimlico
and the Lana ranges launched since the period end, we expect bag sales to make
up 79% of our total by the end of the current financial year.
Collaborations in the period included Swedish minimalist Axel Arigato, the
heritage British designer Paul Smith and the award-winning Stefan Cooke. The
Stefan Cooke collaboration included a pop-up during September's London Fashion
Week and along with the April Axel Arigato collaboration, successfully drove
greater awareness of Mulberry among younger generations. The Paul Smith
collaboration also introduced us to new customers. All led to increased sales.
While bags and leather goods remain Mulberry's mainstay, we continue to
explore opportunities in lifestyle categories. During the period we launched
our lifestyle range and made further investments to extend this range in the
second half of the year.
Strategic pillar 4 - Sustainable lifecycle
Our Made to Last manifesto with its Lifetime Service Centre and the Mulberry
Exchange for pre-loved bags set us apart and are central in our strategy to be
regenerative and circular across our entire supply chain by 2030. This
strategy feeds into everything we do.
In April, our collaboration with Axel Arigato highlighted our wear-forever
ethos while in September, our capsule collaboration with Stefan Cooke,
focusing on pre-loved, was heralded by Vogue as "a strong case for the coolest
bag collaboration of the year". Both brilliantly showcased our Mulberry
Exchange platform, which ensures every Mulberry bag can have multiple lives.
The Stefan Cooke collaboration contributed to the best-ever week for pre-loved
on Mulberry.com. We saw significant growth on the previous financial year.
We remain carbon neutral across our UK operations and source 100% of our
leather from environmentally accredited tanneries. Ongoing efforts to
establish a hyper-local, hyper-transparent farm-to-finished-product model are
further reducing our already lower-than-industry average carbon footprint.
Meanwhile, we offset carbon emissions related to our leather purchases and
business flights and we expect validation of our science-based greenhouse gas
reduction targets by the end of this financial year.
Sustainable materials continue to play an important role in our drive for Net
Zero and this extends to our paper and packaging. Since 2020, more than 3.2
million coffee cups have been turned into Mulberry Green paper packaging and
since 2011 all our cardboard and paper are Forest Stewardship Council
certified.
Respect for people as well as the planet is embedded in all we do and we are
proud to be a certified Living Wage employer and our hybrid working policy
helps cut emissions and costs associated with commuting.
During the period we launched our Diversity, Equity and Inclusion (DE&I)
committee to drive progress across all DE&I topics. To date, this includes
partnering with Mentoring Matters, Flourish in Diversity and The Outsiders
Perspective.
In recognition of all our efforts, in May, we won Brand of the Year at the
Drapers Sustainable Fashion Awards, with the judges citing our Made to Last
Manifesto, our thriving apprenticeship programme and our longstanding
commitment to British manufacturing.
FINANCIAL REVIEW
Group revenue and gross profit
Revenue analysis for the 26 weeks to 30 September 2023 compared to the same
period last year is as follows:
2023 2022
£'m £'m % change
Digital 20.3 16.3 +25%
Stores 39.4 35.3 +12%
Retail (omni-channel) 59.7 51.6 +16%
Franchise and Wholesale 10.0 13.3 -25%
Group Revenue 69.7 64.9 +7%
Digital 12.8 10.8 +19%
Stores 23.4 23.3 0%
Omni-channel - UK 36.2 34.1 +6%
Digital 2.9 2.7 +7%
Stores 10.6 9.2 +15%
Omni-channel - Asia Pacific 13.5 11.9 +13%
Digital 4.6 2.8 +64%
Stores 5.4 2.8 +93%
Omni-channel - Rest of World 10.0 5.6 +79%
Retail (omni-channel) 59.7 51.6 +16%
Q1 Q2 H1 2023
Revenue % change Revenue % change Revenue % change
£'m £'m £'m
Digital 10.1 +19% 10.2 +31% 20.3 +25%
Stores 20.1 +15% 19.3 +8% 39.4 +12%
Retail (omni-channel) 30.2 +16% 29.5 +15% 59.7 +16%
Franchise and Wholesale 7.0 -18% 3.0 -38% 10.0 -25%
Group revenue 37.2 +8% 32.5 +7% 69.7 +7%
Group revenue increased by 7% (8% CER) in the period, with growth in both Q1
(+8%) and Q2 (+7%) on the prior period. Retail omni-channel sales grew +16% in
the period driven by our strategy to transition some wholesale partners to
full ownership or concession agreements. UK total retail sales increased by
6%. Full price sales in the UK increased by 4% to £27.9m (2022: £26.8m) with
the full price mix reducing slightly to 77% (2022: 79%). UK store sales
remained in line with prior period, however UK digital sales were up 19% on
the prior period, with average transaction value increasing by 9% compared to
the prior period and represented 35% of total UK retail sales (2022: 32%).
Asia Pacific retail revenue increased 13% (18% CER), which includes the first
full six-month period from the Australia retail stores which were acquired in
the second half of last year. Excluding Australia, Asia Pacific retail revenue
would have been down 7% due to the challenging China macro-economic climate
and reduced footfall across all the markets.
Rest of World retail revenue, which includes Europe and the US, increased 79%
(73% CER) with £1.7m relating to the business in Sweden which was acquired in
September 2022. Revenue in the US also increased by 38% (42% CER) due to
increased brand awareness in the market.
Franchise and wholesale sales decreased by 25%, with wholesale arrangements in
Sweden and Australia converted to retail following the purchase of the
business in the prior year.
Other operating expenses
Other operating expenses increased by 21% to £58.9m (2022: £48.6m) and
underlying operating expenses increased by 9%. A breakdown is given below:
2023 2022
£'m £'m % change
Underlying operating expenses 51.6 47.2 +9%
SaaS Costs 3.3 0.8 +313%
Store Closure Charge/(Credit) 0.5 (0.2) -350%
New initiatives - Sweden & Australia 3.5 0.8 +338%
Operating expenses 58.9 48.6 +21%
The underlying operating cost increase has been driven by inflationary and
real-living wage pay increases and we also increased technology spend to
£4.2m (2022: £3.3m) to support the underlying costs associated with projects
and systems investments.
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 £3.3m
(2022: £0.8m) of SaaS costs which would previously have been capitalised, in
line with the accounting for configuration and customisation cost
arrangements. We expect to incur further SaaS costs in the second half.
The acquisition of our stores in Sweden and Australia have increased costs
during the period by £2.7m. The full year impact of these new initiatives
will be included in the current period.
Loss before tax
The Group's underlying loss before tax was £12.3m (2022: underlying loss
before tax of £2.8m), included £3.3m (2022: £0.8m) of SaaS costs and the
additional operational costs of our new stores in Sweden and Australia.
Reported loss before tax for the period was £12.8m (2022: loss before tax of
£3.8m) and includes a store closure charge of £0.5m (2022: credit of
£0.2m). The prior period included £1.2m acquisition costs relating to the
business in Australia and Sweden.
2023 2022
£'m £'m
Underlying loss before tax pre-SaaS costs (9.0) (2.0)
SaaS Costs (3.3) (0.8)
Underlying loss before tax (12.3) (2.8)
Store Closure (Charge)/Credit (0.5) 0.2
Australia and Sweden acquisition costs - (1.2)
Reported loss before tax (12.8) (3.8)
See note 2 below for further details of Alternative Performance Measures.
Taxation
The Group reported a tax charge for the period of £0.6m (2022: £0.3m.) The
tax charge in the period is made up of £0.4m for deferred tax, which is
calculated by applying the forecast full year effective tax rate to the Group
results and £0.2m relating to prior and current period current tax charges.
Balance Sheet
Net working capital, which comprises inventories, trade and other receivables
and trade and other payables decreased by £9.1m to £34.6m at the period end
(2022: £43.7m). This decrease was driven by a reduction in inventories of
£3.4m, as a result of optimisation of inventory levels. We are managing
stock levels in light of the ongoing macro-economic uncertainty and cost
increases.
At the period end, other trade receivables had decreased by £2.7m,
principally due to wholesale customers being converted to direct-to-customer
models. The increase in other trade payables of £3.0m is due to the timing of
payments at the period end date and recognising a liability for contributions
towards the new lessee rentals for the re-assigned Bond Street store.
Lease liabilities (current and non-current) reduced by £7.2m to £53.0m
(2022: £60.2m) due to the release of the lease liability relating to the Bond
Street store, which was re-assigned at the beginning of the period and regular
lease payments made in the period.
Cash flow
The net decrease in cash and cash equivalents of £0.9m (2022: decrease of
£19.5m) included a £6.0m draw down of the Group's revolving credit facility
(RCF). Operating cash outflow for the period was £3.9m (2022: £15.6m) driven
by increased operating expenses but partially offset by the improvement in
working capital.
During the period we continued to invest in capital expenditure of £5.3m
(2022: £5.2m) of which £2.9m (2022: £2.0m) related to transformation
projects and IT systems to support growth. £0.8m (2022: £3.2m) has been
spent in the period on new and existing retail stores.
Borrowing facilities
The Group had bank borrowings relating to drawdowns under its RCF of £13.0m
at 30 September 2023 (2022: £7.0m). The borrowings shown in the balance sheet
also include loans from minority shareholders in the Chinese and Japanese
subsidiaries of £4.5m (2022: £5.6m) and an overdraft of £6.5m (2022:
£nil).
The Group's net cash balance (cash and cash equivalents including overdrafts)
at 30 September 2023 was -£0.6m (2022: £6.5m).
During the period the Group extended its secured RCF with HSBC until September
2027, with unchanged banking covenants. The covenants are tested quarterly on
a "frozen GAAP" basis (excluding the impact of IFRS 16 and SaaS costs) and
contain a 12-month rolling EBITDA target ratio and a maximum net debt target.
In addition, the Group has a £4.0m multi-currency overdraft facility which is
renewed annually.
Significant transactions in the period
Bond Street lease reassignment
On 3 April 2023 the Group assigned the lease on its Bond Street store which
closed in February 2023 and as a result disposed of the right-of-use asset and
released the remaining lease liabilities. Additionally, the Group has incurred
a charge for both the contribution towards lease rentals of the new lessee and
for a financial guarantee covering the remaining period of the lease. The net
charge of £517,000 is included in the Income Statement (see note 2).
Investment in Mulberry Japan Co. Limited
On 27 June 2023 the Group, via its subsidiary Mulberry Trading Holding Company
Limited acquired the 50% share capital owned by its Joint Venture partner
Onward Holding Co Limited, in Mulberry Japan Co. Limited for 1 Yen. Following
the acquisition, the Group now owns 100% of Mulberry Japan Co. Limited (see
note 7).
CONSOLIDATED INCOME STATEMENT
26 WEEKS ENDED 30 SEPTEMBER 2023
Note
Unaudited Unaudited Audited
26 weeks ended 26 weeks ended 52 weeks ended
30 September 2023 £'000 1 October 2022 1 April 2023
£'000 £'000
Revenue 69,743 64,920 159,129
Cost of sales (21,694) (18,954) (45,879)
Gross profit 48,049 45,966 113,250
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 (58,884) (48,599) (108,485)
Other operating income 390 416 776
Operating (loss)/profit (10,445) (2,217) 16,974
Share of results of associates 19 36 52
Finance income 1 5 11
Finance expense (2,334) (1,574) (3,887)
(Loss)/profit before tax (12,759) (3,750) 13,150
Tax charge 4 (639) (279) (1,753)
(Loss)/profit for the period (13,398) (4,029) 11,397
Attributable to:
Equity holders of the parent (12,279) (2,715) 13,243
Non-controlling interests (1,119) (1,314) (1,846)
(Loss)/profit for the period (13,398) (4,029) 11,397
Basic (loss)/profit per share 5 (22.5p) (6.8p) 19.1p
Diluted (loss)/profit per share 5 (22.5p) (6.8p) 19.1p
All activities arise from continuing operations.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
26 WEEKS ENDED 30 SEPTEMBER 2023
Unaudited Unaudited Audited
26 weeks ended 26 weeks ended 52 weeks ended
30 September 2023 £'000 1 October 2022 1 April 2023
£'000 £'000
(Loss)/profit for the period (13,398) (4,029) 11,397
Items that may be reclassified subsequently to profit or loss;
Exchange differences on translation of foreign operations (845) 408 (483)
Total comprehensive (expense)/income for the period (14,243) (3,621) 10,914
Attributable to:
Equity holders of the parent (13,166) (1,882) 12,888
Non-controlling interests (1,077) (1,739) (1,974)
Total comprehensive (expense)/income for the period (14,243) (3,621) 10,914
CONSOLIDATED BALANCE SHEET
AT 30 SEPTEMBER 2023
Unaudited Unaudited Audited
30 September 2023 £'000 1 October 2022 1 April 2023
£'000 £'000
Non-current assets
Intangible assets 7,832 6,390 6,015
Property, plant and equipment 20,274 16,765 19,817
Right-of-use assets 43,649 30,453 57,520
Interests in associates 168 375 254
Deferred tax asset 212 1,871 622
72,135 55,854 84,228
Current assets
Inventories 45,320 48,726 48,250
Trade and other receivables 15,266 17,984 19,901
Current tax asset - 409 -
Cash and cash equivalents 5,852 6,544 6,872
66,438 73,663 75,023
Total assets 138,573 129,517 159,251
Current liabilities
Trade and other payables (25,971) (22,962) (28,143)
Current tax liabilities (331) - (182)
Lease liabilities (9,971) (11,199) (10,932)
Borrowings (23,883) (3,798) (11,562)
(60,156) (37,959) (50,819)
Net current assets 6,282 35,704 24,204
Non-current liabilities
Trade and other payables (2,191) - -
Lease liabilities (43,043) (49,021) (61,666)
Borrowings - (8,814) -
(45,234) (57,835) (61,666)
Total liabilities (105,390) (95,794) (112,485)
Net assets 33,183 33,723 46,766
Equity
Share capital 3,004 3,004 3,004
Share premium account 12,160 12,160 12,160
Own share reserve (854) (923) (896)
Capital redemption reserve 154 154 154
Foreign exchange reserve (170) 1,566 675
Retained earnings 25,176 23,968 38,110
Equity attributable to holders of the parent 39,470 39,929 53,207
Non-controlling interests (6,287) (6,206) (6,441)
Total equity 33,183 33,723 46,766
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
26 WEEKS ENDED 30 SEPTEMBER 2023
Share premium account £'000 Own share reserve £'000 Capital re-demption reserve £'000 Foreign exchange reserve £'000 Non-controlling interest £'000
Share Retained earnings £'000 Total
capital £'000 Total equity £'000
£'000
As at 2 April 2022 3,004 12,160 (1,269) 154 1,158 27,006 42,213 (4,467) 37,746
Loss for the period - - - - - (2,715) (2,715) (1,314) (4,029)
Other comprehensive income for the period - - - - 408 - 408 - 408
Total comprehensive income/(expense) for the period - - - - 408 (2,715) (2,307) (1,314) (3,621)
Charge for employee share-based payments - - - - - 23 23 - 23
Own shares - - 346 - - - 346 - 346
Exercise of share options - - - - - (346) (346) - (346)
Non-controlling interest foreign exchange - - - - - - - (425) (425)
As at 1 October 2022 3,004 12,160 (923) 154 1,566 23,968 39,929 (6,206) 33,723
Profit/(loss) for the period - - - - - 15,958 15,958 (532) 15,426
Other comprehensive expense for the period - - - - (891) - (891) - (891)
Total comprehensive (expense)/income for the period - - - - (891) 15,958 15,067 (532) 14,535
Impairment of shares in trust - - 27 - - (27) - - -
Dividends paid - - - - - (1,789) (1,789) - (1,789)
Non-controlling interest foreign exchange - - - - - - - 297 297
As at 1 April 2023 3,004 12,160 (896) 154 675 38,110 53,207 (6,441) 46,766
Loss for the period - - - - - (12,279) (12,279) (1,119) (13,398)
Other comprehensive expense for the period - - - - (845) - (845) - (845)
Total comprehensive expense for the period - - - - (845) (12,279) (13,124) (1,119) (14,243)
Charge for employee share-based payments - - - - - 7 7 - 7
Impairment of shares in trust - - 42 - - (42) - - -
Adjustment arising from investment by non-controlling interests (see note 7) - - - - - - - 611 611
Adjustment arising from acquisition of non-controlling interests (see note 7) - - - - - (620) (620) 620 -
Non-controlling interest foreign exchange - - - - - - - 42 42
As at 30 September 2023 3,004 12,160 (854) 154 (170) 25,176 39,470 (6,287) 33,183
CONSOLIDATED CASH FLOW STATEMENT
26 WEEKS ENDED 30 SEPTEMBER 2023
Unaudited Unaudited Audited
26 weeks ended 26 weeks ended 52 weeks ended
30 September 2023 £'000 1 October 2022 1 April 2023
£'000 £'000
Operating (loss)/profit for the period (10,445) (2,217) 16,974
Adjustments for:
Depreciation and impairment of property, plant and equipment 2,451 1,922 3,487
Depreciation and impairment of right-of-use assets 4,517 3,577 (5,021)
Amortisation and impairment of intangible assets 921 835 4,041
Gain on lease modifications and lease disposals (5,484) (243) (441)
(Profit)/loss on sale of property, plant and equipment - (2) 96
Business combination gain - - (304)
Share-based payments expense 7 23 23
Operating cash (outflows)/inflows before movements in working capital (8,033) 3,895 18,855
Decrease/(increase) in inventories 3,063 (11,960) (9,722)
Decrease/(increase) in receivables 4,673 (2,057) (3,974)
(Decrease)/increase in payables (1,229) (1,073) 2,001
Cash (used)/generated by operations (1,526) (11,195) 7,160
Income taxes paid (71) (2,790) (2,427)
Interest paid (2,334) (1,582) (3,899)
Net cash(outflow)/inflow from operating activities (3,931) (15,567) 834
Investing activities:
Interest received 1 5 15
Acquisition of businesses (see note 8) (238) - (3,182)
Purchases of property, plant and equipment (3,057) (4,030) (7,129)
Proceeds from disposal of property, plant and equipment - 2 2
Acquisition of intangible fixed assets (2,219) (1,179) (3,919)
Dividend received from associate - - 40
Net cash used in investing activities (5,513) (5,202) (14,173)
Financing activities:
(Repayment)/increase in loans from non-controlling interests (744) 94 246
Investment from non-controlling interest (see note 7) 611 - -
New borrowings 13,309 7,000 6,100
Dividends paid - - (1,789)
Principal elements of lease payments (4,629) (5,840) (10,261)
Net cash generated/(used) in financing activities 8,547 1,254 (5,704)
Net decrease in cash and cash equivalents (897) (19,515) (19,043)
Cash and cash equivalents at beginning of period 6,872 25,669 25,669
Effect of foreign exchange rate changes (123) 390 246
Cash and cash equivalents at end of period 5,852 6,544 6,872
Notes to the condensed financiAL statements
26 WEEKS ENDED 30 SEPTEMBER 2023
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 26 weeks ended 30 September 2023 (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 interim financial statements for the 26 weeks ended 30
September 2023 have not been reviewed or audited.
The information for the 52 weeks ended 1 April 2023 does not constitute
statutory accounts as defined in section 434 of the Companies Act 2006. The
statutory accounts for that period were approved by the Board of Directors on
27 June 2023 and have been filed with the Registrar of Companies. The
auditor's report on those statutory 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) (3) of the Companies Act 2006.
2. ACCOUNTING POLICIES AND BASIS OF PREPARATION
The accounting policies and methods of computation followed in the interim
financial statements are consistent with those published in the Group's Annual
Report and Financial Statements for the 52 weeks ended 1 April 2023.
These condensed consolidated interim financial statements for the 26 weeks
ended 30 September 2023 have been prepared in accordance with IAS 34 'Interim
Financial Reporting' as adopted by the European Union. This report should be
read in conjunction with the Group's financial statements for the 52 weeks
ended 1 April 2023, which have been prepared in accordance with UK-adopted
International Financial Reporting Standards in conformity with the
requirements of the Companies Act 2006.
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.
CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY
Preparation of the condensed consolidated interim financial statements
requires the Directors to make certain estimates and judgements that affect
the measurement of reported revenues, expenses, assets and liabilities.
The critical accounting judgements and key sources of estimation uncertainty
applied in the preparation of the condensed consolidated interim financial
statements are consistent with those described on pages 91-92 of the Group's
Annual Report and Financial Statements for the 52 weeks ended 1 April 2023.
PRINCIPAL RISKS AND UNCERTAINTIES
The management of the business and the execution of the Group's growth
strategies are subject to a number of risks and uncertainties that could
adversely affect the Group's future development. The principal risks and
uncertainties for the Group and the key mitigating actions used to address
them are consistent with those outlined on pages 42-47 of the Group's Annual
Report and Financial Statements for the 52 weeks ended 1 April 2023.
ALTERNATIVE PERFORMANCE MEASURES
In reporting financial information, the Group presents an APMs, which is 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 the 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.
A reconciliation of reported (loss)/profit before tax to underlying
(loss)/profit before tax is set out below:
Unaudited Unaudited Audited
26 weeks ended 26 weeks ended 52 weeks ended
30 September 2023 £'000 1 October 2022 1 April 2023
£'000 £'000
Reconciliation to underlying (loss)/profit before tax
(Loss)/profit before tax (12,759) (3,750) 13,150
Store closure charge/(credit) 517 (210) (205)
Impairment credit related to property, plant and equipment - - (850)
Impairment credit related to right-of-use assets - - (12,949)
Impairment charge for intangible assets - - 2,366
Australia acquisition costs - 933 806
Sweden acquisition costs - 193 193
Underlying (loss)/profit before tax - non-GAAP measure (12,242) (2,834) 2,511
Underlying basic (loss)/profit per share (21.8p) (5.3p) 5.8p
Underlying diluted (loss)/profit per share (21.8p) (5.3p) 5.8p
Store closure charge
During the period no stores (2022: 2 stores) were closed although the lease on
a store that had been closed in February 2023 was assigned on 3 April 2023.
The charge on disposal comprises the release to the income statement of lease
and other liabilities of £17,735,000 (2022: £210,000), the write-off of
right-of-use assets of £11,777,000 (2022: £nil), a charge of lease exit
costs of £150,000 (2022: £nil), a contribution of £5,205,000 (2022 :
£nil) towards the new lessee rentals and a charge of £1,120,000 (2022 :
£nil) being the financial guarantee for the remaining lease rentals.
Australian acquisition costs
During the previous period the Group took over the running of five stores in
Australia and incurred a write-off of debtors of £933,000.
Sweden acquisition costs
During the previous period the Group took over the running of three stores in
Sweden previously owned by the Swedish franchisee and incurred costs of
£193,000.
3. 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 Group had cash and cash equivalents (net of
overdrafts) of -£0.6 million (2022: £6.5 million) at 30 September 2023 and
had drawn down £13.0 million (2022: £7.0 million) on its revolving credit
facility. The Directors have also reviewed the 12-month forecasts including
their resilience in the face of possible downside scenarios.
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 Interim Report
and financial statements.
4. TAXATION
The tax charge relates to deferred tax which is calculated by applying the
forecast full year effective tax rate to the interim (loss)/profit and
calculating the deferred tax balance for the period.
5. EARNINGS PER SHARE ('EPS')
Unaudited Unaudited Audited
26 weeks ended 26 weeks ended 52 weeks ended
30 September 2023 £'000 1 October 2022 1 April 2023
£'000 £'000
Basic (loss)/profit per share (22.5p) (6.8p) 19.1p
Diluted (loss)/profit per share (22.5p) (6.8p) 19.1p
Underlying basic (loss)/profit per share (21.8p) (5.3p) 5.8p
Underlying diluted (loss)/profit per share (21.8p) (5.3p) 5.8p
Earnings per share is calculated based on the following data:
Unaudited Unaudited Audited
26 weeks ended 26 weeks ended 52 weeks ended
30 September 2023 £'000 1 October 2022 1 April 2023
£'000 £'000
(Loss)/profit for the period for basic and diluted earnings per share (13,398) (4,029) 11,397
Adjusting items:
Store closure charge/(credit)* 388 (206) (203)
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* - 193 728
Sweden acquisition costs - 855 193
Underlying (loss)/profit for the period for basic and diluted earnings per (13,010) (3,187) 3,489
share
*These items are included net of tax
Unaudited Unaudited Audited
26 weeks ended 26 weeks ended 52 weeks ended
30 September 2023 £'000 1 October 2022 1 April 2023
£'000 £'000
Weighted average number of ordinary shares for the purpose of basic EPS 59.7 59.6 59.6
Effect of dilutive potential ordinary shares: share options - - -
Weighted average number of ordinary shares for the purpose of diluted EPS 59.7 59.6 59.6
The weighted average number of ordinary shares in issue during the period
excludes those held by the Employee Share Trust.
6. 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 segment 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
26 WEEKS ENDED 30 SEPTEMBER 2023
Other International
UK Asia Pacific £'000 Eliminations £'000 Total
£'000 £'000 £'000
Revenue
Omni-channel 56,616 13,474 10,006 (20,402) 59,694
Wholesale 1,026 2,077 6,946 10,049
Total revenue 57,642 15,551 16,952 (20,402) 69,743
Segment (loss)/profit (6,454) (4,591) 2,395 (8,650)
Central costs (1,278)
Store closure charge (517)
Operating loss (10,445)
Share of results of associates 19
Finance income 1
Finance expense (2,334)
Loss before tax (12,759)
Other International
UK Asia Pacific £'000 Central Total
£'000 £'000 £'000 £'000
Segment capital expenditure 4,572 956 116 - 5,644
Segment depreciation and amortisation 4,431 1,918 708 832 7,889
Segment assets 94,392 23,657 13,226 7,086 138,361
Segment liabilities 68,232 15,135 12,693 9,330 105,390
26 WEEKS ENDED 1 OCTOBER 2022
Other International
UK Asia Pacific £'000 Eliminations £'000 Total
£'000 £'000 £'000
Revenue
Omni-channel 72,280 11,826 5,120 (37,665) 51,561
Wholesale 2,182 3,141 8,036 13,359
Total revenue 74,462 14,967 13,156 (37,665) 64,920
Segment profit/(loss) 665 (1,969) 1,703 399
Central costs (1,700)
Store closure credit 210
Australia acquisition costs (933)
Sweden acquisition costs (193)
Operating loss (2,217)
Share of results of associates 36
Finance income 5
Finance expense (1,574)
Profit before tax (3,750)
Other International
UK Asia Pacific £'000 Central Total
£'000 £'000 £'000 £'000
Segment capital expenditure 2,786 614 1,429 29 4,858
Segment depreciation and amortisation 3,955 926 457 996 6,334
Segment assets 84,413 20,994 14,132 8,107 127,646
Segment liabilities 62,229 8,617 14,341 10,607 95,794
52 WEEKS ENDED 1 APRIL 2023
Other International
UK Asia Pacific £'000 Eliminations £'000 Total
£'000 £'000 £'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 credit related to property, plant and equipment 850
Impairment credit related to right-of-use assets 12,949
Impairment charge related to intangible asset (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
Other International
UK Asia Pacific £'000 Central Total
£'000 £'000 £'000 £'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
For the purposes of monitoring segment performance and allocating resources
between segments, 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 around 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.
7. INVESTMENT IN MULBERRY JAPAN CO. LIMITED
During the period the Group, via its subsidiary Mulberry Trading Holding
Company Limited and its Joint Venture partner Onward Holding Co Limited,
invested additional share capital of £661,000 each into Mulberry Japan Co.
Limited the proceeds of which were used to repay trading loans to both
parties. Following this investment on 27 June 2023 the Group acquired the 50%
share capital owned by Onward Holding Co Limited for a purchase price of 1 Yen
and, following the acquisition, the Group now owns 100% of Mulberry Japan Co.
Limited.
8. ACQUISTION OF NEW ZEALAND STORE
On 12 May 2023 the Group acquired one store previously operated by our New
Zealand franchisee. The Group paid £238,000 to purchase the assets from the
franchisee. The store is being operated by a branch of Mulberry Company
(Australia) Pty Limited.
9. EVENTS AFTER THE REPORTING PERIOD
There are no events to report after the reporting period.
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