Mulberry losses deepen due to Covid-19

In its preliminary results for the 52 weeks to March 28, 2020, Mulberry said adjusted losses before tax had steepened significantly. On an underlying basis, Mulberry reported a  £14.2m loss, largely as a result of the pandemic’s effects on future trading. 

Including £33.1m in adjusting items, the retailer reported loss before tax was £47.9m, compared with £5m in the corresponding year. 

Group revenue for the period was down 10% to £149.3m, while the retailer’s net cash for the period slipped to just £7.2m reflecting increased losses. 

International sales seemed to be something of a silver lining, up 4% to £32.4m, representing 26% of overall sales.

Sales across the Asia-Pacific region rose 30%, which offset a 14% decline in rest-of-the-world sales due to store closures. 

Mulberry reported a 12% reduction in its inventory to £34.9m.

In a current trading update, Mulberry said results were “ahead of expectations” with group revenues down 29% in the 26 weeks between March 29 and September 26. 

Digital sales, however, were up 69% and the retailer said losses would be reduced in the current financial period. 

Mulberry chief executive 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 omnichannel 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.”