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Mulberry posts loss due to impact of COVID crisis

Lauretta Roberts
05 October 2020

Mulberry has posted an adjusted loss before tax of £14.2m due to the impact of the global COVID-19 crisis.

The British luxury house reported a 10% drop in sales of £149.3m in the year to 28 March 2020 but after profit adjustments of £33.7m made in anticipation of the hit from COVID, it converted last year's £1m profit into a loss.

International sales were up 4% to £32.4m with a strong performance in APAC where sales jumped 30%, driven by ongoing investment in the region. Rest of World sales, however, were down 14%, which also included some store closures.

Mulberry has been working to switch its model to decrease its reliance on the wholesale channel and said that direct to consumer sales now represented 91% of total sales. Digital sales represent 24% of total sales.

The business said it had improved supply chain control with inventory reduced by 12% to £34.9m. Cash was down to £7.2m from last year's £11m and as such the business said it would not be paying a full year dividend to protect liquidity and in light of the continuing uncertainty around the COVID crisis.

Mulberry said, however, that trading in the current financial year was ahead of expectations with group revenue down 29% for the 26-week period from 29 March to 26 September 2020 with the trend improving as stores re-opened after global lockdowns. Digital revenue this year is up 69%.

CEO Thierry Andretta said: "The Group has made strategic and operational progress during the most challenging market conditions in the history of the brand. Prior to the impact of the Coronavirus pandemic we were performing well and on-track to record a pre-tax profit in the second half of the year. This was due to progressing our four-pillar growth strategy: our omni-channel distribution, our international development in Asia, a drive for constant innovation, and sustainability. The Group has been able to withstand some of the pressures that we, and indeed the entire retail industry, have been faced with.

"I am extremely proud of my colleagues, who have coped admirably with these challenges.  I am pleased to say the Group reacted swiftly to the impact of COVID-19, managing capital and reducing costs to ensure that we were able to maintain a robust liquidity position.

"Post year end, the Group has continued to benefit from its long-term strategic focus with initial sales ahead of our early expectations. However, we cannot escape the reality that British luxury and UK cities face a very uncertain future, hampered by necessary but dramatic social distancing measures and alarmingly low levels of footfall, as well as the pressures of high rents and business rates and the upcoming changes to tax free shopping.

"We cannot control external events, but we have a clear strategy and remain confident in the strength of the Mulberry brand. I would like to take this opportunity to once more thank my colleagues for their hard work, resilience and dedication during these difficult times."

The brand has yet to announce a successor to creative director Johnny Coca who left the business earlier this year to join Louis Vuitton as women's fashion leather goods director.

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