7th Nov 2018 09:24
LONDON (Alliance News) - Mulberry Group PLC on Wednesday suffered a sharp widening of its interim loss due to the toll of the collapse of department store partner House of Fraser, compounding slumping sales and increasing costs.
Mulberry shares were trading down 3.9% on AIM at 299.0 pence each. The shares are down more than 70% in the past 12 months.
For the six months to September 30, the luxury handbag maker posted a pretax loss of GBP8.2 million compared to GBP609,000 loss a year ago.
The widened loss was due to a one-off GBP2.1 million cost related to the collapse of UK department store chain House of Fraser, in which Mulberry operated 21 concessions.
Back in August, Mulberry said it expected to incur GBP3 million in exceptional costs for the six months to September, related to the fall of the struggling store and its subsequent acquisition by Sports Direct International PLC.
Though the hit from House of Fraser was small than forecast, a further one-off expense of GBP2.5 million related to the company's launch in Korea also contributed the loss.
Operating expenses rose to GBP50.4 million from GBP46.8 million a year ago.
Revenue fell by 8% to GBP68.3 million from GBP74.6 million, with the UK sales affected by "soft retail conditions".
UK Retail sales dropped 11% to GBP40.4 million. On a like-for-like basis, UK Retail sales were 7% lower. What's more, sales in the UK have continued to fall since, dropping 7% in the six weeks to November 3.
Sales in Mulberry's International business increased 13% to GBP12.4 million, benefiting from expansion in China, Taiwan, Hong Kong and Japan, but were 1% lower on a like-for-like basis.
Looking ahead, Mulberry said group like-for-like sales for the first six weeks of the second half were down 8%, with a 14% decline in international adding to the 7% in the UK. Mulberry said this reflected a "challenging UK environment with an encouraging trend in International".
Despite a difficult first half, Mulberry said it expects to report a profit for the year ending March 2019, excluding one-off costs which are expected to come in at GBP6.0 million. In financial 2018, Mulberry reported a pretax profit of GBP6.9 million.
"We are confident that our focus on international growth is the correct strategy to develop Mulberry. We are well positioned for the Christmas trading period, which as ever, will determine our full year result," Chief Executive Officer Thierry Andretta said.
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