8th Dec 2016 08:09
LONDON (Alliance News) - Luxury fashion and accessories company Mulberry Group PLC on Thursday said it swung to a loss in the first half due to higher investments in the business but said revenue grew and it has struck a deal to grow in Asia with its major shareholder.
Mulberry made a pretax loss of GBP500,000 in the half to the end of September, compared to a GBP100,000 profit made a year prior. This was due to a GBP1.0 million hike in investment costs the group made in improving its product range and further foreign exchange costs booked by its overseas subsidiaries.
Revenue rose 10% year-on-year to GBP74.5 million from GBP67.8 million, driven by good online sales growth, up 32%, and as the investments the company has made in improving customer experience, creative talent and product design with the new Mulberry product collection.
The group said like-for-like sales in the 10 weeks to December 3, the start of its second half, rose 3.0%, with total sales up 4.0%. It expects to book further exceptional costs for the full year and an additional GBP2.0 million for North Asian strategic investments.
"Mulberry's new collection under the creative direction of Johnny Coca has been well received by our existing customers and a new audience. We have strengthened our balance sheet with tight inventory management leading to strong cash generation, enabling us to invest in international development and new products," said Thierry Andretta, Mulberry's chief executive.
Mulberry, in a separate statement on Thursday, said it has agreed to form a new joint venture with its majority shareholder, Challice, a company run by Singapore billionaire Christina Ong and her family. Challice owns around 56% of Mulberry's issued share capital.
The pair will create a new entity, Mulberry (Asia) Ltd, which will operate Mulberry's business in China, Hong Kong and Taiwan. Mulberry will own 60% of the new venture.
The division will develop Mulberry's offer to customers in the region, with an initial platform of four stores, a wholesale and omni-channel business and a Chinese language Mulberry.com website.
Mulberry said the new venture is expected to be loss-making in its first two years before moving to profit thereafter.
"The new business announced today in North Asia will progress our strategy of developing our retail and omni-channel model in key luxury markets," Andretta added.
Shares in Mulberry were untraded at the open on Thursday, having last traded at 1,100.00 pence.
By Sam Unsted; [email protected]; @SamUAtAlliance
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