13th Jun 2018 09:37
LONDON (Alliance News) - Mulberry Group PLC said Wednesday its annual profits have fallen in the year as it expanded its Asia network whilst like-for-like sales so far this year drop.
The luxury fashion company posted a pretax profit of GBP6.9 million for the year ended March. A 8.7% decrease from the GBP7.5 million profit it posted the year before.
Profit was hurt by the GBP2.0 million start up costs - up from GBP800,000 the year before - and net store operating expense of GBP2.4 million associated with its new Asian subsidiaries in China, Hong Kong, Taiwan and Japan.
Excluding its new Asian entities, Mulberry posted a 36% increase in pretax profits to GBP11.3 million from GBP8.3 million.
Mulberry's revenue increased 1% to GBP169.7 million from GBP168.1 million the year before. The company's retail sales were up 3% to GBP132.0 million from GBP128.3 million.
UK sales were broadly flat at GBP106.3 million and International sales increased 20% to GBP25.7 million from GBP21.5 million. Digital sales increased 14% to GBP29.0 million from GBP25.5 million and now represent 17% of total revenue, up from 15% the year before.
Mulberry is recommending a total dividend of 5.0 pence per share, flat on the year before.
In a separate announcement, Mulberry said it has signed an agreement with SHK Holdings Ltd to operate the company's business in South Korea.
Mulberry will own 60% of the new Mulberry Co Korea Ltd, with Mulberry and SHK investing GBP4.6 million to purchase assets and develop the new business.
A Korean mulberry.com site and omni-channel platform will form part of the news business, which is expected to start trading in Autumn 2018.
The fashion company said that like-for-like sales are down 7% for the 10 weeks to June 2. International sales are up 1% but the UK sales are down 9% due to "lower footfall and fewer tourists, as more widely reported".
Owing to the House of Fraser store closures, Mulberry will be losing five existing concessions. As a result of the UK sales fall, the company expects International sales will continue to increase as a proportion of its overall sales.
Chief Executive Officer Thierry Andretta said: "We have made significant progress during the year on our international strategy, creating new Mulberry subsidiaries in China, Hong Kong, Taiwan and Japan. We are also pleased to announce today the formation of a new majority owned venture to develop the business in South Korea. Our international business is growing and following the completion of this set up phase in Asia, we will focus on omni-channel, digital partnerships and marketing investment in the region.
"Following another period of cash generation, our balance sheet is strong. Although the UK market remains challenging, we will continue to invest in our strategy to develop Mulberry into a global luxury brand to deliver increased shareholder value."
Shares in Mulberry were down 1.9% Wednesday morning at 760.00 pence each.
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