REG - Mulberry Group PLC - Half Year Results
19/11/2024 07:00
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RNS Number : 7032M Mulberry Group PLC 19 November 2024
Mulberry Group plc
Results for the twenty-six weeks ended 28 September 2024
Focussed on growth and return to profitability
Mulberry Group plc (the "Group" or "Mulberry"), the British sustainable luxury
brand, announces unaudited results for the twenty-six weeks ended 28 September
2024 (the "period").
aNDREA BALDo, CHIEF EXECUTIVE OFFICER, COMMENTED:
"Though I've only been in the role of CEO for under three months, the first
half results illustrate the clear need to reprioritise and rebuild the
business. Mulberry is an iconic brand. It stands out for its rich heritage and
craftsmanship - qualities that our customers recognise and value deeply.
Combined with our unique position in the market, offering responsible luxury
products of unmatched quality and longevity, crafted in our Somerset
factories, Mulberry truly is one of a kind. We are now working on initiatives
to renew the brand's relevance, initially for UK consumers and then for our
international audience.
"In response to current market conditions, we have taken decisive steps to
streamline operations, improve margins, reduce working capital, and strengthen
our cash position. This has also meant reviewing our internal team structure
to ensure we become a leaner, more agile organisation. Additionally, we've
made strategic adjustments to our product, pricing, and distribution
strategies, and we've begun discussions with luxury wholesale partners to
ensure we are present wherever our customers shop.
"There is no question that our industry is facing a period of significant
uncertainty, driven by a challenging and volatile macroeconomic environment
that is impacting consumer confidence in several markets, particularly in our
home country. However, with the teams' efforts on cost-cutting, a strengthened
balance sheet, a renewed brand-first approach and a refreshed business
strategy-details of which I'll share in due course-I am confident we are
making the right moves to bring Mulberry back to profitability."
Financial Highlights
· Group revenue down 19% to £56.1m (2023: £69.7m)
o UK retail sales decreased 14% to £31.3m (2023: £36.2m)
o Asia Pacific retail sales decreased by 31% to £9.3m (2023: £13.5m)
o Total International retail sales decreased 17% to £19.5m (2023: £23.5m),
with the reduction in Asia Pacific partially offset by a 2% increase in the
Rest of World
· Gross margin reduced to 67% (2023: 70%) principally due to stock
optimisation to manage inventory and working capital levels
· Operating expenses decreased 16% to £50.7m (2023: £60.0m) as
action was taken to manage the cost base
· Underlying loss before tax of £15.3m (2023: £12.3m)(1) was a
result of reduced revenue and margin partially offset by lower operational
costs
· Reported loss before tax of £15.7m (2023: £12.8m)
· Equity fundraising of £10.4m and increased debt facilities with
renegotiated covenants undertaken to strengthen further the Group's balance
sheet providing financial flexibility to support management's turnaround plan
Operating Highlights
· Digital performance continued to be robust, with sales
representing 33% of Group revenue (2023: 29%)
o UK Mulberry.com sales increased by 6% and represented 67% of UK digital
revenue (2023: 58%)
· Full price sales represented 78% of retail sales (2023: 77%),
with full price sales in both US and Europe increasing by 9% versus the same
period last year
· Collaborations with Rejina Pyo and Eleventy drove further global
awareness of the Mulberry brand
· Product innovation included the launch of new bags the Soft
Bayswater and Islington Bucket bags which have been well received by customers
· B Corp Certification for sustainability achieved in September
2024
Current Trading
· The wider macro-economic environment, including ongoing
inflationary pressures, continues to present uncertainty and challenges
· We continue to take appropriate cost actions and manage inventory
levels to ensure they align with revenue expectations for the remainder of
this year and next
· New CEO's initial review focussed on enhancing operational
efficiency and targeted product, pricing and distribution strategies to
improve margin and cash position
· Trading for the full financial year is expected to be weighted
towards the second half given the important festive trading period
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 7389 3355
PEEL HUNT (CORPORATE BROKER)
JAMES THOMLINSON
TEL: +44 (0) 20 7419 8900
Notes
1 See note 2 on pages 16 and 17 for more details of alternative performance
measures and one-off costs
2 Net borrowings comprises cash balances of £8.8m (2023: £5.9m) less bank
borrowings of £25.2m (2023: £19.5m), which excludes related parties and
non-controlling interest of £7.8m (2023: £4.5m)
OVERVIEW
Trading during the twenty-six weeks ended 28 September 2024 was challenging as
the previously highlighted difficult trading environment and uncertain
macroeconomic trends continued to impact the Group. Action has been and
continues to be taken to reduce operating expenses as well as to optimise
inventory levels and better manage working capital. An equity fundraising of c
£10m (net) was undertaken at the end of the period which, along with
increased debt facilities with renegotiated covenants, strengthened further
the Group's balance sheet in light of the current trading environment and
provides financial flexibility to support management's drive to return the
Group to profitability.
Group revenues declined 19% over the period, with a reduction in gross margin
to 66.5% (2023: 70.4%) principally due to stock optimisation to manage
inventory and working capital levels. The lower revenue and margins resulted
in an increased underlying loss before tax of £15.3m for the period (2023:
£12.3m), partially offset by lower operating costs, reflecting cost actions
taken before the start of the financial year. We ended the period with net
borrowings of £16.4m(2) (2023: £13.5m).
The UK remains our largest market, and it continued to be affected by low
consumer confidence. UK revenue for the period was 14% below the same period
last year, with store revenues down 17%.
International retail sales represented 38% of our total retail sales in the
period (2023: 39%). In Asia Pacific, retail sales declined 31% to £9.3m
(2023: £13.5m) predominantly due to the continued challenging macro-economic
climate in China and South Korea, with retail sales down 52% and 29%
respectively. However, retail sales in Australia were up 3% on the same period
last year.
Franchise and Wholesale revenue declined by 46% to £5.4m (2023: £10.0m) with
declines across all countries as wholesale and franchise partners placed lower
orders due to the macroeconomic conditions , particularly Italy and Denmark.
Collaborations in the period included those with luxury Italian fashion brand
Eleventy in July and South Korean designer Regina Pyo in September. The Regina
Pyo collection, inspired by our Blenheim bag family's archives and given a
modern twist, proved popular with a broad range of customers. Meanwhile, new
bags launched in the period included the Soft Bayswater, recognising the trend
to a more minimalistic design and silhouette, and the Islington Bucket, both
launched in April.
Sustainability and circularity continue to be central to Mulberry's business
model and on 17 September we were pleased to announce our B Corp
Certification. This is a significant milestone in our road towards a
regenerative and circular business model, validating our purpose-led approach
to progressive British luxury.
BOARD CHANGES
Appointment of Chief Executive Officer
On 1 September 2024, Andrea Baldo joined the Board as Chief Executive Officer.
He brought with him significant international fashion expertise, creativity
and strategic thinking, having worked with luxury brands including Maison
Martin Margiela, Marni and most recently as CEO of Ganni.
STRATEGY UPDATE
Since joining the Group, Andrea Baldo has been working on a review of
strategy. His immediate focus has been and will continue to be, on
reprioritising and rebuilding Mulberry. Steps have already been taken to
streamline operations to improve margins, and to ensure teams are
well-positioned to work effectively and with agility. Additionally,
adjustments have been made to product, pricing, and distribution strategies,
and discussions with potential wholesale partners have been commenced to make
sure Mulberry is present wherever our customers shop. The strategic review
will be concluded in December and the date for its announcement will be made
in due course.
CURRENT TRADING AND OUTLOOK
The wider macro-economic environment, including ongoing inflationary
pressures, continues to present uncertainty and challenges. In response, we
continue to review our cost base and are taking further action to align it
with revenues for the remainder of this year and next. Trading for the full
financial year is expected to be weighted towards the second half given the
important festive trading period.
Mulberry is a much loved British icon with a rich heritage. While delivery of
the Board's strategic goals of becoming a global luxury brand, pursuing
international retail expansion, and big product launches has been hampered by
the ongoing challenging trading conditions, the Board is convinced there is a
clear path back to profitability over time driven by Andrea Baldo's focus on
improving operational flexibility to ensure we can always act with agility and
pace. The capital raising announced at the end of the period provides the
Group with additional financial flexibility to support this.
FINANCIAL REVIEW
Loss before tax
2024 2023
£'m £'m % change
Revenue 56.1 69.7 (19%)
Cost of sales (18.8) (20.6) 9%
Gross profit 37.3 49.1 (24%)
Other operating expenses (50.7) (60.0) 16%
Other operating income 0.3 0.4 (25%)
Operating loss (13.1) (10.5) (25%)
Share of results of associates - - -
Finance expense (2.6) (2.3) (13%)
Loss before tax (15.7) (12.8) (23%)
The table above summarises the Group Income Statement, showing the reported
loss before tax for the period of £15.7m (2023: £12.8m). Further details are
discussed within this Financial Review.
2024 2023
£'m £'m % change
Underlying loss before tax pre-SaaS costs (14.5) (9.0) (61%)
SaaS costs (0.8) (3.3) 76%
Underlying loss before tax (15.3) (12.3) (24%)
Store closure credit/(charge) 0.8 (0.5) 260%
Strategic project costs (0.4) - -
Restructuring costs (0.8) - -
Reported loss before tax (15.7) (12.8) (23%)
The table above shows the reconciliation from the reported loss before tax in
the period of £15.7m (2023: £12.8m) to the underlying loss.
The Group's underlying loss for the period of £15.3m (2023: £12.3m), was a
result of reduced revenue and margin, partially offset with lower operational
costs. The operating expenses table within this financial review shows the
operational costs decrease of £9.3m to £50.7m for the period (2023:
£60.0m). Underlying operating expenses decreased by £8.1m to £47.0m (2023:
£55.1m).
Reported loss before tax for the period of £15.7m (2023: £12.8m), includes
adjusting items of a net credit of £0.8m (2023: charge £0.5m) for the
closure of one retail store, UK head office restructuring costs of £0.8m
(2023: nil) and strategic project costs of £0.4m (2023: nil).
Group revenue
Revenue analysis for the 26 weeks ended 28 September 2024 compared to the same
period last year is as follows:
2024 2023
£'m £'m % change
Digital 18.4 20.3 (9%)
Stores 32.3 39.4 (18%)
Retail (omni-channel) 50.7 59.7 (15%)
Franchise and Wholesale 5.4 10.0 (46%)
Group Revenue 56.1 69.7 (19%)
Digital 11.8 12.8 (8%)
Stores 19.4 23.4 (17%)
Omni-channel - UK 31.2 36.2 (14%)
Digital 1.7 2.9 (41%)
Stores 7.6 10.6 (28%)
Omni-channel - Asia Pacific 9.3 13.5 (31%)
Digital 4.9 4.6 7%
Stores 5.3 5.4 (2%)
Omni-channel - Rest of World 10.2 10.0 2%
Retail (omni-channel) 50.7 59.7 (15%)
Q1 Q2 H1 2024
Revenue % change Revenue % change Revenue % change
£'m £'m £'m
Digital 9.5 (5%) 8.9 (14%) 18.4 (9%)
Stores 17.6 (12%) 14.7 (24%) 32.3 (18%)
Retail (omni-channel) 27.1 (10%) 23.6 (20%) 50.7 (15%)
Franchise and Wholesale 4.2 (41%) 1.2 (58%) 5.4 (46%)
Group revenue 31.3 (16%) 24.8 (24%) 56.1 (19%)
Group revenue decreased by 19% in the period, with a decline in both Q1 (-16%)
and Q2 (-24%) on the same period last year. During Q2, trade continued to face
challenges within all regions, as uncertain macroeconomic trends continued.
Retail omni-channel sales reduced by 15% in the period with declines across
all regions. UK total retail sales decreased by 14%. Full price sales in the
UK decreased by 13% to £24.3m (2023: £27.9m) with the full price mix
unchanged at 77% (2023: 77%). UK store sales declined 17% against the prior
period, however average transaction value increased by 9%. UK digital sales
were down 8% on the prior period, however average transaction value increased
by 1% compared to the prior period and represented 38% of total UK retail
sales (2023: 35%).
Asia Pacific retail revenue decreased 31% compared to the same period last
year. China and Korea saw the largest declines at 52% and 29% respectfully,
with the challenging economic environment and reduced footfall impacting all
markets. A detailed strategic review is currently in progress.
Rest of World retail revenue, which includes Europe and the US, increased 2%.
Ireland store sales increased by 8% as a result of Brown Thomas which has
converted toa retail concession, having previously been classified within
Wholesale. Retail sales in Italy increased by 51%, driven by the pop up in The
Mall, Leccio, which opened in May 23.
Franchise and wholesale sales decreased by 46%, with declines across all
countries as wholesale and franchise partners have placed lower orders due to
the macroeconomic conditions, particularly in Italy and Denmark. The prior
period also included wholesale orders for Brown Thomas, which has since
converted to a retail concession and a one-off collaboration with the British
designer, Paul Smith.
Gross margin
2024 2023
£'m £'m % change
Revenue 56.1 69.7 (20%)
Cost of sales (18.8) (20.6) 9%
Gross profit 37.3 49.1 (24%)
Gross profit margin 66.5% 70.4%
Gross margin during the period was 66.5% (2023: 70.4%), resulting in a 24%
fall in gross profit relative to the prior period. This was predominantly due
to stock optimisation to manage inventory and working capital levels, along
with promotional activity earlier in the period when compared to the prior
period and some reductions in the recommended retail price of some product
lines.
Other operating expenses
2024 2023
£'m £'m % change
Operating expenses 19.1 25.4 25%
Staff costs 19.9 22.1 10%
Depreciation and amortisation 3.1 3.4 9%
Systems and comms 4.7 4.2 (12%)
Foreign exchange loss/(gain) 0.2 - -
Underlying operating expenses 47.0 55.1 15%
SaaS costs 0.8 3.3 76%
Store closure (credit)/charge (0.8) 0.5 260%
Under recover of overheads into inventory 2.5 1.1 (127%)
Strategic project costs 0.4 - -
Restructure costs 0.8 - -
Operating expenses 50.7 60.0 16%
Operating expenses decreased by 16% to £50.7m (2023: £60.0m) and underlying
operating expenses decreased by 15%.
During the period we have taken further cost actions in light of the uncertain
trading conditions, with more anticipated in the second half of the current
financial period, as the wider economic challenges and uncertainty continue
and we build the Group back to profitability.
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 £0.8m
(2023: £3.3m) 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.
Taxation
The Group reported a tax charge for the period of £0.4m (2023: £0.6m.) This
relates 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 £23.7m to £10.9m at the period end
(2023: £34.6m). This decrease was driven by a reduction in inventories of
£20.2m, as a result of optimisation of inventory levels. We have been
managing stock levels in light of the ongoing macro-economic uncertainty and
cost increases.
At the period end, other trade receivables had decreased by £2.2m,
principally due to lower wholesale sales in the period. The increase in other
trade payables of £1.3m is due to the timing of payments at the period end
date.
Lease liabilities (current and non-current) reduced by £7.6m to £45.4m
(2023: £53.0m) due to the release of regular lease payments made in the
period.
Cash flow
2024 2023
£'m £'m % change
Operating cash outflow (7.0) (8.0) 13%
Net change in working capital 15.7 6.5 143%
Cash generated/(used) by operations 8.7 (1.5) 680%
Income taxes paid (0.2) (0.1) (100%)
Interest paid (2.6) (2.3) (13%)
Net cash inflow / (outflow) from operating activities 5.9 (3.9) 251%
Acquisition of businesses - (0.2) -
Purchases of property, plant and equipment (0.7) (3.1) 77%
Acquisition of intangible assets (1.2) (2.2) 45%
Other 0.1 - -
Net cash used in investing activities (1.8) (5.5) 67%
Investment from non-controlling interest - 0.6 -
Proceeds from net borrowings 3.8 13.3 (71%)
Repayment of net borrowings (2.1) - -
Repayment of loans from non-controlling interests - (0.8) -
Principal elements of lease payments (4.1) (4.6) 11%
Net cash (used in)/generated by financing activities (2.4) 8.5 (128%)
Net increase/(decrease) in cash and cash equivalents 1.7 (0.9) 289%
The net increase in cash and cash equivalents of £1.7m (2023: decrease of
£0.9m) included a £2.5m drawdown of the Group's revolving credit facility
(RCF) and £1.3m utilisation of a new supplier trade finance facility shown
within proceeds from net borrowings.
As a result of the financial performance in the period there was an operating
cash outflow of £7.0m (2023: outflow £8.0m). This cash outflow has been
offset by a decrease in net working capital which had a cash benefit of
£15.7m largely driven by the reduction in inventories of £20.2m as a result
of the stock optimisation program.
During the period we continued to invest, including £1.9m (2023: £5.3m) of
capital expenditure and £0.8m (2023: £3.3m) of SaaS costs shown within
operating costs. This spend supports investment in our omni-channel
distribution and international development, including the upgrade of our
warehouse management systems and business planning tool, however, in light of
trade during the period the level of investment has been managed.
Borrowing facilities
The Group had bank borrowings relating to drawdowns under its RCF of £17.5m
at 28 September 2024 (2023: £13.0m). The borrowings shown in the balance
sheet also include loans from minority shareholders in the Chinese subsidiary
of £7.8m (2023: £4.5m), supplier trade finance of £1.3m (2023: nil) and an
overdraft of £6.4m (2023: £6.5m).
The Group's net debt balance (comprising cash and cash equivalents, less
overdrafts and borrowings) at 28 September 2024 was £16.4m (2023: net debt of
£13.5m), with available liquidity of £5.7m. Net debt comprises cash balances
of £8.8m (2023: £5.9m) less bank borrowings of £25.2m (2023: £19.4m),
excluding loans from related parties and non-controlling interests of £7.8m
(2023: £4.5m). Net debt also excludes lease liabilities of £45.4m (2023:
£53.0m) which are not considered to be core borrowings.
During the period the Group has amended its' RCF increasing the available
funds from £15.0m to £17.5m and re-negotiated covenants to reflect the
current trading environment. The facility continues to run until 30 September
2027 with security granted in favour of its lender. The Group also signed a
new £6.0m supplier trade finance facility which is backed by UK Export
Finance. In addition, the Group continues to have a £4.0m overdraft facility
in the UK and a $0.5m overdraft facility in Australia, which are renewed
annually.
Significant transactions in the period
Subscription of new ordinary shares;
On 27 September 2024, the Company announced a subscription for 10,000,000 new
ordinary shares at 100 pence per share by Challice Limited, the majority
shareholder of Mulberry, to raise approximately £10m in order to strengthen
the Group's balance sheet. Further details of the subscription are set out in
the Company's announcement. On 3 October 2024 the Group announced that Frasers
Group plc had successfully applied to subscribe for 39.61% of those shares.
These new ordinary shares were admitted to trading on AIM and the subscription
was completed on 4 November 2024.
Also on 27 September 2024, the Group announced a separate retail offer to
qualifying Mulberry shareholders of up to 750,000 new ordinary shares at 100
pence per share. When the retail offer closed on 4 October 2024, applications
had been received for 392,013 new ordinary shares, which were admitted to
trading on AIM, and the retail offer completed, on 9 November 2024.
The net proceeds of the subscription and retail offer will be used to
strengthen the Group's balance sheet and provide financial flexibility to
support plans being developed by Andrea Baldo, Chief Executive Officer, and
the management team to return the business to profitability and support future
growth.
CONSOLIDATED INCOME STATEMENT
26 WEEKS ENDED 28 SEPTEMBER 2024
Note
Unaudited Unaudited Audited
26 weeks ended 26 weeks ended 52 weeks ended
28 September 2024 £'000 30 September 2023 (restated *) 30 March 2024
£'000 £'000
Revenue 56,145 69,743 152,844
Cost of sales (18,813) (20,594) (45,704)
Gross profit 37,332 49,149 107,140
Impairment charge relating to property, plant and equipment - - (1,239)
Impairment charge relating to right-of-use assets - - (7,334)
Other operating expenses (50,725) (59,984) (128,938)
Other operating income 281 390 1,234
Operating loss (13,112) (10,445) (29,137)
Share of results of associates 11 19 31
Finance income - 1 1
Finance expense (2,623) (2,334) (5,019)
Loss before tax (15,724) (12,759) (34,124)
Tax charge 4 (374) (639) (860)
Loss for the period (16,098) (13,398) (34,984)
Attributable to:
Equity holders of the parent (15,068) (12,279) (33,505)
Non-controlling interests (1,030) (1,119) (1,479)
Loss for the period (16,098) (13,398) (34,984)
Basic loss per share 5 (27.0p) (22.5p) (58.6p)
Diluted loss per share 5 (27.0p) (22.5p) (58.6p)
All activities arise from continuing operations.
* In order to be consistent with the full year treatment of fixed production
overheads, reported cost of sales for the period ending 30 September 2023 have
reduced by £1.1m with a corresponding increase in other operating expenses.
The reported loss for the period remains
unchanged.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
26 WEEKS ENDED 28 SEPTEMBER 2024
Unaudited Unaudited Audited
26 weeks ended 26 weeks ended 52 weeks ended
28 September 2024 £'000 30 September 2023 £'000 30 March 2024
£'000
Loss for the period (16,098) (13,398) (34,984)
Items that may be reclassified subsequently to profit or loss;
Exchange differences on translation of foreign operations 51 (845) (1,105)
Total comprehensive expense for the period (16,047) (14,243) (36,089)
Attributable to:
Equity holders of the parent (15,227) (13,166) (34,773)
Non-controlling interests (820) (1,077) (1,316)
Total comprehensive expense for the period (16,047) (14,243) (36,089)
CONSOLIDATED BALANCE SHEET
AT 28 SEPTEMBER 2024
Unaudited Unaudited Audited
28 September 2024 £'000 30 September 2023 £'000 30 March 2024
£'000
Non-current assets
Intangible assets 8,258 7,832 8,700
Property, plant and equipment 17,219 20,274 18,754
Right-of-use assets 30,591 43,649 34,307
Interests in associates 93 168 206
Deferred tax asset - 212 -
56,161 72,135 61,967
Current assets
Inventories 25,079 45,320 33,159
Trade and other receivables 13,120 15,266 15,453
Cash and cash equivalents 8,761 5,852 7,138
46,960 66,438 55,750
Total assets 103,121 138,573 117,717
Current liabilities
Trade and other payables (27,259) (25,971) (23,354)
Current tax liabilities (290) (331) (123)
Lease liabilities (10,526) (9,971) (9,909)
Borrowings (25,175) (23,883) (23,474)
(63,250) (60,156) (56,860)
Net current (liabilities)/assets (16,290) 6,282 (1,110)
Non-current liabilities
Trade and other payables (2,155) (2,191) (2,155)
Lease liabilities (34,898) (43,043) (40,485)
Borrowings (7,785) - (7,338)
(44,838) (45,234) (49,978)
Total liabilities (108,088) (105,390) (106,838)
Net (liabilities)/assets (4,967) 33,183 10,879
Equity
Share capital 3,004 3,004 3,004
Share premium account 12,160 12,160 12,160
Own share reserve (490) (854) (438)
Capital redemption reserve 154 154 154
Foreign exchange reserve (379) (170) (430)
Retained earnings (12,070) 25,176 2,955
Equity attributable to holders of the parent 2,379 39,470 17,405
Non-controlling interests (7,346) (6,287) (6,526)
Total equity (4,967) 33,183 10,879
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
26 WEEKS ENDED 28 SEPTEMBER 2024
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 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
Loss for the period - - - - - (21,226) (21,226) (360) (21,586)
Other comprehensive expense for the period - - - - (260) - (260) - (260)
Total comprehensive expense for the period - - - - (260) (21,226) (21,486) (360) (21,846)
Charge for employee share-based payments - - - - - 18 18 - 18
Impairment of shares in trust - - 416 - - (416) - - -
Non-controlling interest foreign exchange - - - - - - - 121 121
Dividends paid - - - - - (597) (597) - (597)
As at 30 March 2024 3,004 12,160 (438) 154 (430) 2,955 17,405 (6,526) 10,879
Loss for the period - - - - - (15,068) (15,068) (1,030) (16,098)
Other comprehensive expense for the period - - - - 51 - 51 - 51
Total comprehensive expense for the period - - - - 51 (15,068) (15,017) (1,030) (16,047)
Credit for employee share-based payments - - - - - (9) (9) - (9)
Impairment of shares in trust - - (52) - - 52 - - -
Non-controlling interest foreign exchange - - - - - - - 210 210
As at 28 September 2024 3,004 12,160 (490) 154 (379) (12,070) 2,379 (7,346) (4,967)
CONSOLIDATED CASH FLOW STATEMENT
26 WEEKS ENDED 28 SEPTEMBER 2024
Unaudited Unaudited Audited
26 weeks ended 26 weeks ended 52 weeks ended
28 September 2024 £'000 30 September 2023 £'000 30 March 2024
£'000
Operating loss for the period (13,112) (10,445) (29,137)
Adjustments for:
Depreciation and impairment of property, plant and equipment 2,063 2,451 6,191
Depreciation and impairment of right-of-use assets 3,745 4,517 16,654
Amortisation and impairment of intangible assets 982 921 1,760
Gain on lease modifications and lease disposals (802) (5,484) (6,100)
Loss on sale of property, plant and equipment 65 - 601
Loss on sale of intangibles - - 29
Gain on waiver on loan from non-controlling interest - - (504)
Share-based payments (credit/expense (9) 7 25
Operating cash outflows before movements in working capital (7,068) (8,033) (10,481)
Decrease in inventories 8,080 3,063 15,188
Decrease in receivables 2,333 4,673 4,495
Increase/(decrease) in payables 5,332 (1,229) (3,707)
Cash generated/(used) by operations 8,677 (1,526) 5,495
Income taxes paid (208) (71) (343)
Interest paid (2,623) (2,334) (5,019)
Net cash inflow/(outflow) from operating activities 5,846 (3,931) 133
Investing activities:
Interest received - 1 1
Acquisition of businesses - (238) (238)
Purchases of property, plant and equipment (704) (3,057) (5,948)
Acquisition of intangible fixed assets (1,188) (2,219) (3,835)
Dividend received from associate 109 - -
Net cash used in investing activities (1,783) (5,513) (10,020)
Financing activities:
Proceeds from loans from non-controlling interests - - 3,934
Investment from non-controlling interest (see note 7) - 611 611
Repayment of borrowings (2,051) - -
New borrowings 3,752 13,309 17,374
Repayment of loans from non-controlling interests - (744) (1,171)
Dividends paid - - (597)
Principal elements of lease payments (4,100) (4,629) (9,802))
Net cash (used)/generated in financing activities (2,399) 8,547 10,349
Net increase/(decrease)decrease in cash and cash equivalents 1,664 (897) 462
Cash and cash equivalents at beginning of period 7,138 6,872 6,872
Effect of foreign exchange rate changes (41) (123) (196)
Cash and cash equivalents at end of period 8,761 5,852 7,138
Notes to the condensed financiAL statements
26 WEEKS ENDED 28 SEPTEMBER 2024
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 28 September 2024 (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 28
September 2024 have not been reviewed or audited.
The information for the 52 weeks ended 30 March 2024 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 September 2024 and have been filed with the Registrar of Companies. The
auditor's report on those statutory accounts was not qualified, although
included an emphasis of matter in respect of material uncertainty around going
concern and did not contain statements under section 498(2) (3) of the
Companies Act 2006. The report stated that should there be an extreme and
prolonged decline in trading performance which is over and above the current
trading levels and the level of mitigating actions including promotional
activity was not achieved, then the Group would breach its covenants during
the going concern period. This would give rise to a material uncertainty,
which may cast significant doubt on the Group and parent company's ability to
continue as a going concern, meaning it may be unable to realise its assets
and discharge its liabilities in the normal course of business.
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 30 March 2024.
These condensed consolidated interim financial statements for the 26 weeks
ended 28 September 2024 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 30 March 2024, 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 74-75 of the Group's
Annual Report and Financial Statements for the 52 weeks ended 30 March 2024.
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 27-31 of the Group's Annual
Report and Financial Statements for the 52 weeks ended 30 March 2024.
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
before tax is set out below:
Unaudited Unaudited Audited
26 weeks ended 26 weeks ended 52 weeks ended
28 September 2024 £'000 30 September 2023 £'000 30 March 2024
£'000
Reconciliation to underlying loss before tax
Loss before tax (15,724) (12,759) (34,124)
Store closure (credit)/charge (773) 517 1,576
Restructuring costs 824 - 1,241
Strategic project costs 424 - -
Impairment charge related to property, plant and equipment - - 1,239
Impairment charge related to right-of-use assets - - 7,334
IT Project costs - - 647
Gain on waiver of loan from non-controlling interest - - (504)
Underlying loss before tax - non-GAAP measure (15,249) (12,242) (22,591)
Underlying basic loss per share (26.7p) (21.8p) (40.1p)
Underlying diluted loss per share (26.7p) (21.8p) (40.1p)
Store closure charge
During the period 1 store (2023: 0 stores) was closed. The charge on
disposal comprises the release to the income statement of lease and other
liabilities of £802,000 (2023: £17,735,000), the write-off of right-of-use
assets of £nil (2023: £11,777,000), a charge of lease exit costs of
£29,000 (2023: £150,000), a contribution of £nil (2023: £5,205,000)
towards new lessee rentals and a charge of £nil (2023 : £1,120,000) being
the financial guarantee for remaining lease rentals.
Restructuring costs
During the period the Group continued its restructuring programme which began
in the second half of the prior period and incurred redundancy costs of
£824,000 (2023: £nil).
Strategic project costs
The Group has undertaken a number of strategic projects and incurred costs
during the period of £424,000 (2023: £nil).
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's net debt balance (comprising cash and cash
equivalents, less overdrafts and borrowings) at 28 September 2024 was £16.4m
(2023: net debt of £13.5m). Net debt comprises cash balances of £8.8m (2023:
£5.9m) less bank borrowings of £25.2m (2023: £19.4m), excluding loans from
related parties and non-controlling interests of £7.8m (2023: £4.5m).
The Group's full year financial statements for the period ended 30 March 2024
were announced on 27(th) September 2024 and the Directors concluded that there
were adequate resources for the Group to continue as a going concern for the
foreseeable future. However, should there be an extreme and prolonged decline
in trading performance which is over and above the current trading levels and
the level of mitigating actions including promotional activity was not
achieved, then the Group would breach its covenants during the going concern
period. This gave rise to a material uncertainty, which cast significant doubt
on the Group and parent company's ability to continue as a going concern,
meaning it may be unable to realise its assets and discharge its liabilities
in the normal course of business. The Directors have continued to review 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 prior period and current period current tax
charges.
5. EARNINGS PER SHARE ('EPS')
Unaudited Unaudited Audited
26 weeks ended 26 weeks ended 52 weeks ended
28 September 2024 30 September 2023 30 March 2024
Basic loss per share (27.0p) (22.5p) (58.6p)
Diluted loss per share (27.0p) (22.5p) (58.6p)
Underlying basic loss per share (26.7p) (21.8p) (40.1p)
Underlying diluted loss per share (26.7p) (21.8p) (40.1p)
Earnings per share is calculated based on the following data:
Unaudited Unaudited Audited
26 weeks ended 26 weeks ended 52 weeks ended
28 September 2024 £'000 30 September 2023 £'000 30 March 2024
£'000
(Loss)/profit for the period for basic and diluted earnings per share (16,098) (13,398) (34,984)
Adjusting items:
Restructuring costs * 618 - 992
Store closure (credit)/charge * (773) 388 2,266
Strategic project costs 318 - -
Impairment charge related to property, plant and equipment* - - 1,266
Impairment charge related to right-of-use assets* - - 6,532
IT project costs - - 485
Gain on waiver of loan from non-controlling interest - - (504)
Underlying loss for the period for basic and diluted earnings per share (15,935) (13,010) (23,947)
*These items are included net of tax
Unaudited Unaudited Audited
26 weeks ended 26 weeks ended 52 weeks ended
28 September 2024 Million 30 September 2023 30 March 2024
Million Million
Weighted average number of ordinary shares for the purpose of basic EPS 59.7 59.7 59.6
Effect of dilutive potential ordinary shares: share options - - -
Weighted average number of ordinary shares for the purpose of diluted EPS 59.7 59.7 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 28 SEPTEMBER 2024
Other International
UK Asia Pacific £'000 Eliminations £'000 Total
£'000 £'000 £'000
Revenue
Omni-channel 51,019 9,267 10,230 (19,774) 50,742
Wholesale 343 896 4,164 5,403
Total revenue 51,362 10,163 14,394 (19,774) 56,145
Segment (loss)/profit (8,020) (4,047) 1,034 (11,033)
Central costs (1,604)
Store closure credit 773
Restructuring costs (824)
Strategic project costs (424)
Operating loss (13,112)
Share of results of associates 11
Finance income -
Finance expense (2,623)
Loss before tax (15,724)
Other International
UK Asia Pacific £'000 Central Total
£'000 £'000 £'000 £'000
Segment capital expenditure 792 198 - - 990
Segment depreciation and amortisation 4,108 1,073 650 959 6,790
Segment assets 71,162 13,339 10,265 8,355 103,121
Segment liabilities 72,931 16,147 10,945 8,065 108,088
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
52 WEEKS ENDED 30 MARCH 2024
Other International
UK Asia Pacific £'000 Eliminations £'000 Total
£'000 £'000 £'000
Revenue
Omni-channel 137,130 27,711 22,339 (52,437) 134,743
Wholesale 1,490 3,650 12,961 18,101
Total revenue 138,620 31,361 35,300 (52,437) 152,844
Segment (loss)/profit (21,854) (396) 4,940 (17,310)
Central costs (294)
Store closure expense (1,576)
Restructuring costs (1,241)
Impairment charge related to property, plant and equipment (1,239)
Impairment charge related to right-of-use assets (7,334)
Project costs (647)
Gain on waiver of loan 504
Operating loss (29,137)
Share of results of associates 31
Finance income 1
Finance expense (5,019)
Loss before tax (34,124)
Other International
UK Asia Pacific £'000 Central Total
£'000 £'000 £'000 £'000
Segment capital expenditure 7,828 2,182 417 56 10,483
Segment depreciation and amortisation 11,604 8,452 2,633 1,916 24,605
Segment assets 84,008 16,266 9,692 7,751 117,717
Segment liabilities 72,158 17,605 9,669 7,406 106,838
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. EVENTS AFTER THE REPORTING PERIOD
Subscription of new ordinary shares;
On 27 September 2024, the Company announced a subscription for 10,000,000 new
ordinary shares at 100 pence per share by Challice Limited, the majority
shareholder of Mulberry, to raise approximately £10m in order to strengthen
the Group's balance sheet. Further details of the subscription are set out in
the Company's announcement. On 3 October 2024 the Group announced that Frasers
Group plc had successfully applied to subscribe for 39.61% of those shares.
These new ordinary shares were admitted to trading on AIM and the subscription
was completed on 4 November 2024.
Also on 27 September 2024, the Group announced a separate retail offer to
qualifying Mulberry shareholders of up to 750,000 new ordinary shares at 100
pence per share. When the retail offer closed on 4 October 2024, applications
had been received for 392,013 new ordinary shares, which were admitted to
trading on AIM, and the retail offer completed, on 9 November 2024.
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