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Despite a largely favourable company report, the share price of Mulberry (LSE:MUL) had the glide angle of a brick as the market opened this morning. The company released its preliminary results for the year ending 31 March 2012, at 7:00 a.m. Trading opened at 1,691.00 pence at 8:05 a.m., but by 8:22 a.m. the share price had fallen nearly 175.00 pence to 1,519.00. Recovering slightly over the next 40 minutes, it appeared to be finding its level around 1:00 p.m. at the 1,540.00 range.
When Good News Is Bad News
Despite admirable increases in total revenue, operating profit, pre-tax profit, net profit, EPS, cash-on-hand, net assets and equity, some shareholders reacted adversely to profits falling short of expectations by more than £1 million. There may have also been some additional concern over a meager 12% growth in retail sales during the last 10 weeks.
Highlights of the Report
Total revenue was reported as £168.5 million, a 38% increase over £122 million in FY2011, but below a forecast of £175 million. Pre-tax profit, which had been projected at just over £37 million, came in at £36 million, a commendable 55% increase from last year’s £23.3 million. Domestic sales increased by 30% to £77.2 million, with like-for-like sales posting a 27% increase. International sales performed exceptionally well with a 61% increase from £40.5 million to £65.2 million. The company’s online sales also experienced healthy growth with a 58% increase to a total £14.5 million. On line sales now account for 9% of Mulberry’s total sales. The resulting basic EPS grew 47% to 43.9 pence from last year’s 29.8 pence.
Other Items of Note
Bruno Guillon joined Mulberry on 01 March 2012 as CEO, replacing Godfrey Davis, who is now Non-executive Chairman. He came to Mulberry from his executive position at Hermes.
Mulberry opened 14 new stores during the year. The stores are located in the UK, the Netherlands, the US, Korea, Singapore, Thailand, and Taiwan. Sixteen additional stores are scheduled to open during the current year. All of the new stores will be outside of the UK.
The expansion of the company’s UK factory was completed, adding an additional 30% production capacity and 60 new jobs. Mulberry is building a new factory that will double their UK production capacity and add another 300 jobs.
Executive Comments
Chairman Godfrey Davis observed that:
“This year has seen us deliver another strong set of results and we have performed well against expectations. While the current economic conditions make the short term trading outlook more challenging in some markets, we remain confident about Mulberry’s long term future. We continue to focus on developing our business internationally, opening new stores and building the foundations for long term growth.”
New CEO Bruno Guillon said:
“I have joined Mulberry at a very exciting time. The opportunity for the Mulberry brand is significant, with the profits earned from its strong domestic position supporting the increasing pace of international expansion. The challenge for the next few years is to build upon the solid foundations that have been laid, seize the international opportunity in a way that maintains the careful positioning of the brand within the luxury market, whilst continuing to make the enduring quality of our products central to everything we do.”
Company Spotlight
Mulberry is a luxury fashion brand and is the largest manufacturer of luxury leather goods in the UK, featuring the leading handbag brands Bayswater, Del Rey and Alexa. It’s range of product extends to women’s wear, accessories, and footwear. Mulberry was named the Best Designer Brand at the 2010 British Fashion Awards. The company has retail locations in high fashion districts in 24 different countries
Karen, I love this post! The relationships we never expect to form and the funny stories built alongside are one of my favorite parts of this industry, and life in general. I totally love that someone wanted you to write a shipping extension for delivering by African busses! Also, pretty sure I know this coffee guy of which you speak.