Mulberry Swings Back to Profit in Busy Pandemic Year
LONDON — Sales at Mulberry declined 23 percent to 115 million pounds in the year to March 27, but the British handbag and accessories brand returned to profit during the pandemic, despite its physical stores remaining shut for much of the 12-month period.
Profit totaled 4.6 million pounds, compared with last year’s loss of 47.9 million pounds, reflecting growth in Asia and digital sales. The company also eschewed markdowns in the period, which boosted its profit margins, and made a series of economies, including layoffs during lockdown.
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The company also took advantage of expiring leases in its store network, closing two stores in Canada, and winding down business at airports and with John Lewis and House of Fraser in the U.K.
Underlying profit before tax was 5.9 million pounds, compared with a loss before tax of 14.2 million pounds in the previous year. Mulberry’s shares closed up 7 percent at 3.10 pounds on the London Stock Exchange.
Mulberry, which is marking its 50th anniversary, is back in revenue growth mode. The company said group revenue in the period to date is 45 percent ahead of last year, with retail revenue up 30 percent due to a strong recovery in the U.K., and continuing growth in Asia, with China retail sales up 46 percent.
“I have been immensely proud to lead Mulberry this year. In the last 12 months, our teams have faced enormous challenges posed by the global health crisis and have responded with resilience, resolve and passion,” said Thierry Andretta, the brand’s chief executive officer.
“We have delivered a robust financial performance and have made good strategic progress in our journey to build Mulberry as a leading sustainable global luxury brand,” he added.
Image Courtesy of Mulberry
During the 12-month period, Mulberry’s international retail sales rose 4 percent to 33.8 million pounds, compared with the previous year’s 32.4 million pounds. Sales in Asia Pacific grew 36 percent, driven by ongoing development in the region, while China retail sales were up 81 percent, and South Korea retail rose by 36 percent.
Retail sales in the rest of the world were down 27 percent.
On an operating level, digital sales generated 49 percent of total revenue, compared with 24 percent in 2020, as customers migrated to online channels when stores were shut. During the year, the company established a European distribution facility to support online sales post-Brexit.
In an interview, Andretta said it was “an extremely difficult year for Mulberry, but the staff pulled together and we stood by our long-term objectives. They were very focused, and we implemented the strategies we had planned.”
Asked about the future of the physical store network, given Mulberry’s rapid pivot to online, Andretta said they were crucial to the brand. “Stores will be important, and going forward we’ll have to optimize our store network. It’s the point of contact with the customer. Although we did virtual appointments during lockdown, physical stores offer a completely different level of interaction.”
He said the company would be further integrating its physical and digital retail strategies, and there were no plans to downsize the Mulberry stores. Andretta added that in terms of product, five handbag families were performing particularly well — the Alexa, Bayswater, Lily, Iris and Amberley.
He added that customers were also going for Mulberry’s traditional tanned leather, which is being sourced and treated in a more environmentally friendly way.
During the 12-month period, Mulberry made strides regarding its sustainability agenda. It launched its Made to Last Manifesto with a commitment to transform the business to “a regenerative and circular model, encompassing the entire supply chain, from field to wardrobe” by 2030.
It noted that 80 percent of the collection is now made from leather sourced from environmentally accredited tanneries.
That figure will increase to 100 percent by the fall 2022 season. Mulberry is also doing bag repairs at its Somerset, England, headquarters, restoring more than 10,000 bags a year, and has become an accredited Living Wage Employer, meaning that it pays an hourly wage that is higher than the government-mandated minimum wage.
The company helped the COVID-19 relief cause by making PPE gowns and providing meals to those in need.
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