TIDMMUL
RNS Number : 3310T
Mulberry Group PLC
24 November 2021
Mulberry Group plc
Results for the twenty-six weeks ended 25 September 2021
Further strategic progress amid strong consumer demand
Mulberry Group plc (the "Group" or "Mulberry"), the British
sustainable luxury brand, announces unaudited results for the
twenty-six weeks ended 25 September 2021 (the "period").
THIERRY ANDRETTA, CHIEF EXECUTIVE OFFICER, COMMENTED:
"I am proud of Mulberry's performance during the period. Our
long-term strategy, namely our innovative and sustainable products
made in our carbon neutral Somerset factories, our market-leading
omni-channel distribution model, and our expansion into Asia
Pacific, has delivered a strong financial performance.
"Product innovation and sustainability are central to our
strategy, demonstrated by the recent launch of our "The Lowest
Carbon collection", further supporting the commitments we made in
our Made to Last manifesto and our goal to reach zero carbon
emissions by 2035.
"The bold decisions we have taken with regards to focussing on
our UK production capabilities, means that we are well placed for
the festive trading period and beyond. Finally, I would like to
take this opportunity to thank my colleagues for their hard work,
commitment and achievement over the period."
Financial Highlights
-- Group revenue increased 34% to GBP65.7m (2020: GBP48.9m)
-- Profit before tax of GBP10.2m (2020: loss before tax GBP2.4m)
includes a one-off profit on disposal of Paris lease of GBP5.7m
-- Gross margin of 69% (2020: 59%) due to a strategic focus on
full-price sales and increased volume efficiencies
-- UK retail sales increased 36% to GBP38.0m (2020: GBP28.0m)
-- China retail sales increased 38%, which contributed to the
23% increase in Asia Pacific retail sales to GBP11.8m (2020:
GBP9.5m), reflecting ongoing investment in the region
-- US retail sales increased 57% to GBP3.3m (2020: GBP2.1m)
-- International retail sales represented 40% of Group revenue (2020: 41%)
-- Franchise and wholesale sales increased 67% to GBP10.1m (2020: GBP6.0m)
-- Strong period end net cash of GBP30.3m (2020: GBP8.6m) and
deferred liabilities of GBP5.0m (2020: GBP4.6m)
Operating Highlights
-- Business and infrastructure responded well to increased
demand following easing of COVID-19 restrictions
-- Digital sales 29% of Group revenue in the period, lower than
last year when stores were closed but up from 20% (H1 2019),
reflecting the ongoing strength of this channel
Sustainability Highlights
-- Launched on 22 November 2021, "The Lowest Carbon collection",
crafted from the world's lowest carbon leather and using a local
and transparent supply chain. This is Mulberry's first capsule
collection of regenerative "farm to finished product", further
supporting our Made to Last manifesto
-- Continue to focus on embedding sustainability and circularity
across the entire business, following the launch of the Made to
Last manifesto in April 2021
-- Successful launch of our resale programme "Preloved Bags", across all channels
-- Further investment in the Lifetime Service Centre at The
Rookery which is now restoring more than 10,000 bags a year
-- Committed to set Science Based Targets aligned with our 2035 Net Zero emissions target
-- 86% of the collection now uses leather and suede sourced from
environmentally accredited tanneries; on track to increase to 100%
by Autumn/Winter 2022. All other non-leather materials are fully
sustainable
-- Collaborations with contemporary British Designers
emphasising sustainable techniques and materials
Current Trading
-- Retail revenue in the 8 weeks to 20 November 2021 increased
35% compared to the same period last year
-- Gross margin in the second half is expected to be similar to,
or slightly higher than, the 67% achieved in the second half of
last year
-- The Group is expected to continue generating cash from
operations in the second half and, with its deferred liabilities
expected to unwind, the Group will maintain a strong cash position
at the year end
FOR FURTHER DETAILS PLEASE CONTACT:
Mulberry
Charles Anderson Tel: +44 (0) 20 7605 6793
Headland (Public Relations)
Lucy Legh / KIRSTY CARRUTHERS Tel: +44 (0) 20 3805 4822
mulberry@headlandconsultancy.com
GCA Altium Limited (FINANCIAL ADVISER AND NOMAD)
Tim Richardson Tel: +44 (0) 20 7484 4040
OVERVIEW
The Group has delivered a strong performance. Group revenue
increased by 34%, returning to pre-COVID-19 levels and profit
before tax was GBP10.2m (2020: loss of GBP2.4m), which included a
profit of GBP5.7m on the lease in Paris. The underlying profit
before tax of GBP4.5m (2020: loss before tax of GBP 1.9 m) and
financial strength of the Group reflects the benefits of the
actions we took during the pandemic and a strong consumer reaction
to the Group's product.
Sales in the UK recovered strongly once our stores re-opened.
The sales lost from the absence of tourists in the UK and the
rationalisation of stores in Europe were replaced by strong growth
in Asia.
Gross margin increased to 69% (2020: 59%) driven by a strategic
focus on full-price sales and increased volume efficiencies .
The combination of our UK factories, careful planning and agile
supply chains has enabled us to successfully navigate the
well-publicised difficulties in global logistics, with no impact on
fulfilment to our sales channels.
We ended the period with net cash of GBP30.3m (2020: GBP8.6m)
and deferred liabilities of GBP5.0m (2020: GBP 4.6 m).
Looking ahead, our mission continues to be focused on becoming
the leading responsible British luxury brand and a pioneer in
sustainability. Through our Made to Last manifesto, launched in
April, we are committed to transform our business to be a
regenerative and circular model that will encompass the entire
supply chain, from field to wardrobe by 2030. We believe the
opportunity is substantial and we have taken a progressive
leadership position in this space, investing in products that are
made to last, and offering customers circular repair and buy back
options through the Mulberry Exchange.
Mulberry's results demonstrate the continued relevance and
popularity of the brand and show ongoing progress against both
financial and operational goals.
CURRENT TRADING AND OUTLOOK
The underlying sales trends experienced in the first half
continued into October and November with improving store sales, a
strong digital performance and continuing growth in Asia. The
comparative period in the prior year was affected by sporadic
closures and lockdowns which make direct comparisons difficult but,
subject to unforeseen events, sales are expected to continue to
grow in the second half. Retail revenue in the 8 weeks to 20
November increased 35% compared to the same period last year.
Gross margin in the second half is expected to be similar to, or
slightly higher than, the 67% achieved in the second half last
year.
The Lowest Carbon collection, crafted from the world's lowest
carbon leather and using a local and transparent supply chain,
launched on 22 November 2021. This is Mulberry's first capsule
collection of regenerative "farm to finished product", further
supporting our Made to Last manifesto. This collection represents
the future of the business as we continue to build a network of
regenerative and organic farms to supply the hides to create our
leather across the UK and Europe. The capsule was also featured at
the recent G20 Summit in Rome.
In view of the strong performance in the first half and the
Group's substantial cash reserves, a progressive increase in
marketing expenditure is planned in the second half to continue
building brand awareness worldwide.
Projects are in place to move the Group's legacy systems
forward, and to develop the next generation of digital and
omni-channel platforms. This is expected to lead to increased
capital expenditure next year and beyond.
The Group is expected to continue generating cash in the second
half and with the deferred liabilities expected to unwind, the
Group will maintain a strong cash position at the year end.
It should be noted that the outlook continues to be subject to a
degree of uncertainty as the important festive period commences.
The Group's performance would undoubtedly be negatively affected by
any further countrywide lockdowns or a further wave of
COVID-19.
FINANCIAL REVIEW
Group revenue and gross profit
By 12 April 2021, all our stores worldwide were reopened
following a second wave of global lockdowns due to COVID-19.
Sales analysis for the 26 weeks to 25 September 2021 compared to
the same period last year is as follows:
2021 2020
GBP'm GBP'm % Change
Digital 19.1 23.4 -19%
Stores 36.5 19.5 +87%
-------
Retail (omni-channel) 55.6 42.9 +30%
------- ------- -----------
Franchise and wholesale 10.1 6.0 +67%
------- ------- -----------
Group revenue 65.7 48.9 +34%
======= ======= ===========
Digital 14.2 18.0 -21%
Stores 23.8 10.0 +139%
----- ----- ------
Omni-channel - UK 38.0 28.0 +36%
----- ----- ------
Digital 2.2 1.7 +30%
Stores 9.6 7.9 +22%
----- ----- ------
Omni-channel - Asia Pacific 11.8 9.5 +23%
----- ----- ------
Digital 2.7 3.7 -28%
Stores 3.1 1.7 +82%
----- ----- ------
Omni-channel - Rest of world 5.8 5.4 +7%
----- ----- ------
Total Retail (omni-channel) 55.6 42.9 +30%
===== ===== ======
Q1 Q2 H1 2021
GBP'm % Change GBP'm % Change GBP'm % Change
Sales Sales Sales
Digital 9.3 -36% 9.8 +11% 19.1 -18%
Stores 16.6 +202% 19.9 +42% 36.5 +87%
------- --------- ------- --------- ------- ---------
Retail (omni-channel) 25.9 +29% 29.7 +30% 55.6 +30%
------- --------- ------- --------- ------- ---------
Franchise and wholesale 6.4 +276% 3.7 -14% 10.1 +68%
------- --------- ------- --------- ------- ---------
Group revenue 32.3 +48% 33.4 +23% 65.7 +34%
------- --------- ------- --------- ------- ---------
Group revenue increased by 34% and was 3 % above the same period
in 2019 (pre COVID-19) on a comparable basis (adjusting for store
openings and closures). In the UK, total retail sales recovered
strongly and were 7% above the same period in 2019 on a comparable
basis. UK digital sales declined by 21% as stores re-opened, but
represented 37% of UK retail sales, compared to 26% in 2019,
reflecting the accelerated shift to digital and omni-channel
shopping.
China sales increased 38%, which contributed to the 23% increase
in Asia Pacific, driven by ongoing investment in the region. China
digital sales represented 43% of China retail sales.
Franchise and wholesale sales increased by 67% as our Franchise
partners benefited from the post COVID-19 recovery and increased
demand following the easing of restrictions.
Gross margin increased to 69% (2020: 59%) driven by a strategic
focus on full-price sales and increased volume efficiencies .
Other operating expenses
Other operating expenses in the period increased by 11.7% to
GBP40.0m (2020: GBP35.8m) due to further marketing spend to support
international growth and additional revenue related costs. The
Group continued to benefit from the business rates relief, albeit
at a lower level than in the previous year.
Following the cost actions taken in response to COVID-19, the
Group is managing its cost base in line with anticipated trading
levels.
Other operating income
Included within other operating income in the period is GBPnil
(26 weeks ended 26 September 2020: GBP4.1m and 52 weeks ended 27
March 2021 GBP4.9m) of grants receivable under the Coronavirus Job
Retention Scheme (CJRS). The Group decided not to utilise the CJRS
in the period due to the strong trading performance.
Profit before tax
The Group's reported profit before tax for the period was
GBP10.2m (2020: loss before tax of GBP2.3m), which included a
one-off profit of GBP5.7m on the early termination and the exit of
a lease in Paris. The Group's underlying profit before tax was
GBP4.5m (2020: loss before tax of GBP 1.9 m) .
See note 2 for further details of Alternative Performance
Measures.
Taxation
The Group reported a tax charge for the period of GBP2.9m (2020:
GBP0.3m) which includes a GBP2.4m charge on the profit on the
disposal of an intangible lease asset, in respect of the early
termination of the Paris lease. The effective tax rate is 14 %
(2020: 14%) on underlying profit and is lower than the UK tax rate
for the period of 19% primarily due to the use of brought forward
tax losses and not recognising deferred tax assets on the Group's
accumulated tax losses.
Balance Sheet
Intangible assets decreased by GBP8.6m to GBP6.4m (2020:
GBP15.0m) predominantly due to the early termination of the Paris
lease. Right-of-use assets decreased by GBP8.3m to GBP34.6m (2020:
GBP42.9m) due to an impairment charge against right-of-use assets
recorded in the 26 weeks to 27 March 2021.
Net working capital, which comprises inventories, trade and
other receivables and trade and other payables decreased by GBP2.0m
to GBP19.4m (2020: GBP21.4m). This was mainly due to the decrease
in inventories, as we continue to manage our inventory position,
and the increase in debtors and creditors due to increased volume.
There has been a slight increase in inventories since 27 March 2021
with increased inventories of raw materials to protect the Group
from supply chain delays, balanced by reduced finished goods as the
agile supply chain systems continue to deliver results.
The reduction in lease liabilities (current and non-current) by
GBP17.3m to GBP70.9m (2020: GBP88.2m) is primarily due to the
renegotiation and termination of certain leases.
Cash flow
The net increase in cash and cash equivalents per the cash flow
statement of GBP18.5m (2020: GBP0.6m) mainly reflected the strong
financial performance in the period and the net proceeds from the
early termination of the Paris lease , slightly offset by higher
capital expenditure in Asia Pacific.
The profit and proceeds from the disposal of intangibles of
GBP5.4m and GBP13.3m respectively relate to the early termination
of the Paris lease.
Borrowing facilities
The Group had no bank borrowings at 25 September 2021. The
borrowings shown in the balance sheet are loans from minority
shareholders in the Chinese and Japanese subsidiaries.
The Group's net cash balance (cash and cash equivalents less
overdrafts) at 25 September 2021 was GBP30.3m (2020: GBP8.6m). Net
cash comprises cash balances of GBP30.3m (2020: GBP8.6m).
During the period the Group extended its secured revolving
credit facility (RCF) with HSBC until March 2023, and renegotiated
covenants to reflect the ongoing COVID-19 environment. The RCF
covenants are tested quarterly on a "frozen GAAP" basis (excluding
the impact of IFRS 16) and contain a net debt to EBITDA ratio, and
a fixed charge cover ratio. The RCF was undrawn during the period,
and we do not anticipate drawing on the facility in the second
half.
In addition, the Group has a GBP4.0m overdraft facility which is
renewed annually.
Going concern
The Group has continued to trade significantly ahead of the
Directors' original base case forecasts with a cash position
materially ahead of assumptions, enhanced by the net proceeds from
the early termination of a lease in Paris, announced on 6 July
2021. As a result, the Directors remain confident that despite the
current uncertainties, the Group has the financial resources to
enable it to continue to operate as a going concern for the
foreseeable future.
PROGRESS AGAINST OUR STRATEGY
With our rich heritage in leather craftmanship and reputation
for innovation, we strive to grow the Group through our four
strategic pillars which focus on omni-channel distribution,
international development, constant innovation, and a sustainable
lifecycle.
Strategic pillar 1 - Omni-channel distribution
Our omni-channel distribution model is designed to allow
customers to research, buy and return product anywhere across our
stores and digital platforms.
We aim to enhance our customers' experience and drive
engagement, and this includes developing our store network through
selective store openings and closures, the continued roll-out of
the new Mulberry store concept and further enhancements to our
digital network.
Most of our retail stores were open by 12 April 2021 and except
for some localised restrictions, trade was uninterrupted in the
first half of the year. UK retail sales also benefited from the
development of our omni-channel distribution, providing the
customer with a single view of inventory, which helped to drive a
stronger full price sales mix.
Virtual and in-store appointments continue to play an important
part in the customer journey, even after the stores reopened,
representing 8% of all UK store sales and resulting in an increased
average transaction value (compared to store walk-ins).
Digital sales represented 29% of Group revenue, which
demonstrates the accelerated shift to digital and omni-channel
shopping across all regions. In Asia Pacific, digital sales grew to
19% of the region's sales, supported by local fulfilment in Japan
and the development of strategic partnerships, including T-Mall in
China. China digital sales grew 22% and represented 43% of total
China sales. On 15 July 2021 we also launched a We Chat programme
in China, which coincided with the Alexa x Alexa launch. This is a
long-term programme with the aim of building brand awareness in the
region, with content regularly updated and tailored to relevant
campaigns, products, and customers.
We have continued to refine the retail network. Our store
network closed the period with 113 points of sale inclusive of
retail and franchise. This included the opening of 7 doors
internationally 6 in our new store concept. There were 7 closures
in the same period, including the early exit of our Paris store. In
the UK we operated 45 retail stores([1]) at the period end (2020:
45 ), which included 12 John Lewis and 7 House of Fraser
concessions. We will continue to manage the business proactively
and focus on optimising the store network.
[1] Store numbers include own stores and concessions operated by
Mulberry employees
Strategic pillar 2 - International development
We are optimising our digital channels and global store network,
with a particular focus on Asia Pacific, which continues to offer
significant growth opportunities.
Asia Pacific retail sales increased by 23%, driven by ongoing
investment in the region, with China retail sales up 38%, South
Korea retail sales up 7% and Japan retail sales up 54%. Retail
sales in South Korea and Japan were disrupted to some extent by
regional and local lockdowns in the period. In Asia Pacific we
operated 38 retail stores at the period end (2020: 34 ). During the
period we opened 4 retail stores in China in Beijing (2), Chengdu
and Wuhan and 2 retail stores in South Korea, which included our
new store concept. This features design elements that represent our
distinctive British heritage and enables us to better display and
promote our collections. The concept includes innovative
customer-facing technology, creates more space and supports our
omni-channel proposition. It has helped to elevate our brand
position with the new concept stores outperforming more traditional
outlets.
As stated above, the 4 stores opened in China were Beijing World
Financial Centre, Beijing Shin Kong Place and Wuhan Heartland 66,
along with a pop-up in Chengdu International Finance Square. A
further opening in Shanghai International Finance Centre is due to
open in November 2021.
The investment in the Group's subsidiaries supported the overall
growth, with China and South Korea making further progress in the
period. Higher sell throughs and reduced mark down periods also
contributed to this success as well as better positioning for the
brand.
Our global pricing strategy, which sets retail prices in all
markets and currencies at the same level, is a competitive
difference giving our customers the confidence to shop the brand in
their home markets.
During the period it was agreed to terminate the lease of our
Paris store which closed on 24 July 2021. We plan to open a new
store in Paris once international tourism returns in a location
which supports the Company's omni-channel approach and optimises
its customer centric retail experience.
Strategic pillar 3 - Constant innovation
We continue to innovate with new services, new materials and
methods of creation and production to adapt to changing customer
tastes and meet demand. At the same time, we are transforming our
agile supply chain, enhancing market reactivity, and reducing lead
time, to match the increase in digital demand.
In September, we launched the Sadie family, a timeless satchel
with the new Typography lock, and the Billie family, a youthful
crossbody slouchy silhouette. Both families are crafted from
leather sourced from our partner tanneries with positive
environmental credentials and Leather Working Group ratings.
We have continued our 50th anniversary celebrations through a
series of joyful collaborations with three of the most visionary
designers of their generation - Priya Ahluwalia, Richard Malone and
Nicholas Daley. Each designer has created a capsule collection as
part of Mulberry Editions, a new offering of limited-edition
accessories that have been delivered throughout 2021. Crafted
entirely from surplus fabrics and leather, the Mulberry x Ahluwalia
collection heroes the Portobello Tote silhouette, which was our
first 100% sustainable leather bag, launched in 2019. The Richard
Malone capsule sees the Irish designer reinvent the iconic
Bayswater with his signature authenticity, resourcefulness,
sustainability, and experimentation. This Bayswater updates the
silhouette's timeless detailing and is crafted with our sustainable
Eco-Scotchgrain, made from recombined bio-plastic materials, and
embossed with a distinctive pebble grain finish. The Nicholas Daley
capsule will launch in January 2022.
Strategic pillar 4 - Sustainable lifecycle
Mulberry products have been Made to Last from the outset and we
are committed to lifetime service for a Mulberry item. In April
2021 we launched our Made to Last manifesto, which sets us apart
from our competition. We are committed to transform our business to
be a regenerative and circular model that will encompass the entire
supply chain, from field to wardrobe by 2030.
We launched Mulberry Exchange in February 2020, our circular
buy-back and re-sale programme. This was further extended in April
2021 through the digital launch of the Mulberry Exchange programme
on Mulberry.com. Through the Mulberry Exchange programme, we buy
back bags from customers who are ready for a change, repair and
restore them in our Lifetime Service Centre at The Rookery, and
list them through one of our resale channels. Any bags which are
not fit for repair are sent for energy reclamation at our strategic
partner, Scottish Leather Group, powering the production of new
leather to make the next Mulberry bags.
In July, Mulberry committed to setting Science Based Targets,
and joined a group of over 650 global businesses working to hold
temperature rise to 1.5degC above pre-industrial levels. Mulberry's
listing as "committed" is just the first step on our journey
towards our aim of achieving Net Zero emissions by 2035.
86 % of the collection now uses leather and suede sourced from
environmentally accredited tanneries; expected to increase to 100%
by Autumn/Winter 2022. All other non-leather materials are fully
sustainable.
Marketing and brand
To mark our 50th anniversary year, Mulberry announced the launch
of the Made to Last manifesto, laying out an ambitious commitment
to transform the business to a regenerative and circular model,
encompassing the entire supply chain, from field to wardrobe by
2030. The 360-campaign kicked off with a livestreamed launch event
(due to Covid restrictions), featured a series of global brand
advocates in the sustainability sphere and was supported by a
global media plan featuring the manifesto. May 2021 saw the launch
of The Mulberry Exchange on Mulberry.com; to support this we
partnered with Dazed on a Tik Tok focussed activation,
commissioning a series of up-and-coming Tik Tok stars to style a
selection of our pre-loved bags.
As mentioned above, to support our collaborations with designers
Priya Ahluwalia, Richard Malone and Alexa Chung, we held a series
of events to promote these visionary designers and their
collections globally. A highlight of these was an event at the
V&A in September's London fashion week to showcase Malone's
eco-friendly version of our timeless Bayswater bag using
Eco-Scotchgrain and leather from gold standard, environmentally
accredited tanneries.
We continued our focus on building relationships in the digital
marketing space, with new and existing digital media partners and
third-party affiliates to reach younger audiences and drive new
customer growth on our digital platforms. Our designer
collaborations across the year were aligned to reach these younger,
fashion forward audiences, with Alexa x Alexa being the peak of
this in July. The success of Alexa x Alexa also ran into August
with additional spend and placements booked to continue the strong
performance seen here.
CONSOLIDATED INCOME STATEMENT
26 WEEKSED 25 september 2021
Note
Unaudited Unaudited Audited
26 weeks ended 26 weeks ended 52 weeks ended 27 March
25 September 2021 26 September 2020 2021
GBP'000 GBP'000 GBP'000
Revenue 65,719 48,919 114,951
Cost of sales (20,326) (20,019) (41,879)
Gross profit 45,393 28,900 73,072
Impairment charge related
to property, plant and
equipment - - (590)
Impairment charge related
to right-of-use assets - - (5,725)
Store closure credit (1) 5,700 1,992 3,702
Lease modification - 3,951
Other operating expenses (39,960) (35,785) (71,638)
Other operating income (2) 779 4,691 6,006
Operating profit/(loss) 11,912 (202) 8,778
Share of results of
associates 61 (32) (60)
Finance income 8 3 12
Finance expense (1,769) (2,121) (4,176)
Profit/(loss) before tax 10,212 (2,352) 4,554
Tax (charge)/credit 4 (2,929) 330 43
Profit/(loss) for the
period 7,283 (2,022) 4,597
Attributable to:
Equity holders of the
parent 7,568 (1,713) 4,773
Non-controlling interests (285) (309) (176)
Profit/(loss) for the
period 7,283 (2,022) 4,597
Basic profit/(loss) per
share 5 12.2p (3.4p) 7.7p
Diluted profit/(loss) per
share 5 12.2p (3.4p) 7.7p
All activities arise from continuing operations.
( 1) For the 26 weeks ended 26 September 2020 the store closure
credit of GBP1,992,000 was included within Other operating
expenses
(2) Included within Other operating income is GBPnil (26 weeks
ended 26 September 2020: GBP4,089,000; 52 weeks ended 28 March
2021: GBP4,868,000) of grants receivable under HM Revenue &
Customs Coronavirus Job Retention Scheme and GBP435,000 (26 weeks
ended 26 September 2020: GBP448,000; 52 weeks ended 28 March 2021:
GBP471,000) from similar overseas schemes.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
26 WEEKSED 25 SEPTEMBER 2021
Unaudited Unaudited Audited
26 weeks ended 26 weeks ended 52 weeks ended 27 March
25 September 2021 GBP'000 26 September 2020 GBP'000 2021
GBP'000
Profit/(loss) for the
period 7,283 (2,022) 4,597
Items that may be
reclassified subsequently
to profit or loss;
Exchange differences on
translation of foreign
operations (295) 412 (49)
Total comprehensive
income/(expense) for the
period 6,988 (1,610) 4,548
Attributable to:
Equity holders of the
parent 7,287 (1,506) 4,294
Non-controlling interests (299) (104) 254
Total comprehensive
income/(expense) for the
period 6,988 (1,610) 4,548
CONSOLIDATED BALANCE SHEET
AT 25 SEptember 2021
Unaudited Unaudited Audited
25 September 2021 GBP'000 26 September 2020 GBP'000 27 March 2021
GBP'000
Non-current assets
Intangible assets 6,412 15,032 14,965
Property, plant and equipment 13,521 15,436 13,608
Right of use assets 34,592 42,936 33,511
Interests in associates 253 128 134
Deferred tax asset 635 1,487 1,234
55,413 75,019 63,452
Current assets
Inventories 32,041 33,580 31,476
Trade and other receivables 13,204 11,453 12,609
Current tax asset - 432 525
Cash and cash equivalents 30,328 8,595 11,820
75,573 54,060 56,430
Total assets 130,986 129,079 119,882
Current liabilities
Trade and other payables (25,845) (23,739) (22,629)
Current tax liabilities (1,912) - -
Lease liabilities (15,356) (17,849) (14,820)
Borrowings (1,321) (3,431) -
(44,434) (45,019) (37,449)
Net current assets 31,139 9,041 18,981
Non-current liabilities
Lease liabilities (57,342) (70,400) (59,054)
Borrowings (3,504) (1,491) (4,673)
(60,846) (71,891) (63,727)
Total liabilities (105,280) (116,910) (101,176)
Net assets 25,706 12,169 18,706
Equity
Share capital 3,004 3,004 3,004
Share premium account 12,160 12,160 12,160
Own share reserve (1,272) (906) (1,277)
Capital redemption reserve 154 154 154
Foreign exchange reserve 979 1,735 1,274
Retained earnings 14,546 (54) 6,957
Equity attributable to holders of the
parent 29,571 16,093 22,272
Non-controlling interests (3,865) (3,924) (3,566)
Total equity 25,706 12,169 18,706
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
26 WEEKSED 25 SEPTEMBER 2021
Share Share Own Capital Foreign Retained Non-controlling Total
capital premium share re-demption exchange earnings Total interest equity
GBP'000 account reserve reserve reserve GBP'000 GBP'000 GBP'000 GBP'000
GBP'000 GBP'000 GBP'000 GBP'000
As at 28 March 2020 3,004 12,160 (1,061) 154 1,323 1,761 17,341 (3,820) 13,521
Loss for the period - - - - - (1,713) (1,713) (309) (2,022)
Other comprehensive
income/(expense) for
the period - - - - 207 - 207 205 412
Total comprehensive
income/(expense) for
the period - - - - 207 (1,713) (1,506) (104) (1,610)
Charge for employee
share-based payments - - - - - 53 53 - 53
Impairment of shares
in trust - - 155 - - (155) - - -
Non-controlling
interest foreign
exchange - - - - 205 - 205 - 205
As at 26 September
2020 3,004 12,160 (906) 154 1,735 (54) 16,093 (3,924) 12,169
Profit for the period - - - - - 6,486 6,486 133 6,619
Other comprehensive
(expense)/income for
the period - - - - (686) - (686) 225 (461)
Total comprehensive
(expense)/income for
the period - - - - (686) 6,486 5,800 358 6,158
Charge for employee
share-based payments - - - - - 52 52 - 52
Own shares - - 101 - - 5 106 - 106
Exercise of share
options - - - - - (4) (4) - (4)
Release of impairment
of shares in trust - - (472) - - 472 - - -
Non-controlling
interest foreign
exchange - - - - 225 - 225 - 225
As at 27 March 2021 3,004 12,160 (1,277) 154 1,274 6,957 22,272 (3,566) 18,706
Profit/(loss) for the
period - - - - - 7,568 7,568 (285) 7,283
Other comprehensive
expense for the
period - - - - (281) - (281) (14) (295)
Total comprehensive
(expense)/income for
the period - - - - (281) 7,568 7,287 (299) 6,988
Charge for employee
share-based payments - - - - - 24 24 - 24
Own shares - - 5 - - - 5 - 5
Exercise of share
options - - - - - (3) (3) - (3)
Non-controlling
interest foreign
exchange - - - - (14) - (14) - (14)
As at 25 September
2021 3,004 12,160 (1,272) 154 979 14,546 29,571 (3,865) 25,706
CONSOLIDATED CASH FLOW STATEMENT
26 WEEKSED 25 september 2021
Unaudited Unaudited Audited
26 weeks ended 26 weeks ended 52 weeks ended 28 March 2020
25 September 2021 GBP'000 26 September 2020 GBP'000
GBP'000
Operating profit/(loss) for the
period 11,912 (202) 8,778
Adjustments for:
Depreciation and impairment of
property, plant and equipment 1,850 2,311 4,777
Depreciation and impairment of
right-of-use assets 3,257 3,654 13,245
Amortisation of intangible
assets 914 542 1,476
Gain on lease modifications and
disposals (548) (2,215) (10,314)
(Profit)/loss on sale of
property, plant and equipment (8) - 188
Profit on sale of intangible (5,343) - -
assets
Own shares transferred from
trust 5 - 106
Share-based payments charge 24 53 105
Operating cash flows before
movements in working capital 12,063 4,143 18,361
(Increase)/decrease in
inventories (604) 1,335 3,420
Increase in receivables (595) (378) (1,534)
Increase in payables 2,966 1,532 75
Cash generated by operations 13,830 6,632 20,322
Income taxes received 101 332 201
Interest paid (1,772) (943) (3,960)
Net cash inflow from operating
activities 12,159 6,021 16,563
Investing activities:
Interest received 8 3 12
Purchases of property, plant and
equipment (1,260) (657) (1,895)
Proceeds from disposal of
property, plant and equipment 8 - 26
Acquisition of intangible fixed
assets (868) (633) (2,233)
Proceeds from disposal of 13,316 - -
intangible assets
Net cash generated/(used) in
investing activities 11,204 (1,287) (4,090)
Financing activities:
Increase in loans from
non-controlling interests 165 - 167
Repayment of borrowings - (750) (750)
Principle elements of lease
payments (4,989) (3,343) (7,735)
Settlement of share awards - - (4)
Net cash used in financing
activities (4,824) (4,093) (8,322)
Net increase in cash and cash
equivalents 18,539 641 4,151
Cash and cash equivalents at
beginning of period 11,820 7,998 7,998
Effect of foreign exchange rate
changes (31) (44) (329)
Cash and cash equivalents at end
of period 30,328 8,595 11,820
Notes to the condensed financiAL statements
26 WEEKSED 25 SEPTEMBER 2021
1. GENERAL INFORMATION
Mulberry Group plc is a company incorporated in the United
Kingdom under the Companies Act 2006. The half year results and
condensed consolidated financial statements for the 26 weeks ended
25 September 2021 (the interim financial statements) comprise the
results for the Company and its subsidiaries (together referred to
as the Group) and the Group's interest in associates. The interim
financial statements for the 26 weeks ended 25 September 2021 have
not been reviewed or audited.
The information for the 52 weeks ended 27 March 2021 does not
constitute statutory accounts as defined in section 434 of the
Companies Act 2006. The statutory accounts for that period were
approved by the Board of Directors on 20 July 2021 and have been
filed with the Registrar of Companies. The auditor's report on
those statutory accounts was not qualified, did not include a
reference to any matters to which the Auditor drew attention by way
of emphasis without qualifying the report and did not contain
statements under section 498(2) (3) of the Companies Act 2006.
2. ACCOUNTING POLICIES AND BASIS OF PREPARATION
The accounting policies and methods of computation followed in
the interim financial statements are consistent with those as
published in the Group's Annual Report and Financial Statements for
the 52 weeks ended 27 March 2021.
These condensed consolidated interim financial statements for
the 26 weeks ended 25 September 2021 have been prepared in
accordance with IAS 34 'Interim Financial Reporting' as adopted by
the European Union. This report should be read in conjunction with
the Group's financial statements for the 52 weeks ended 27 March
2021, which have been prepared in accordance with International
Financial Reporting Standards (IFRSs) as adopted by the European
Union.
The Annual Report and Financial Statements are available from
the Group's website (www.mulberry.com) or from the Company
Secretary at the Company's registered office, The Rookery,
Chilcompton, Bath, England, BA3 4EH.
CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION
UNCERTAINTY
Preparation of the condensed consolidated interim financial
statements requires the Directors to make certain estimates and
judgements that affect the measurement of reported revenues,
expenses, assets and liabilities.
The significant accounting judgements and key sources of
estimation uncertainty applied in the preparation of the condensed
consolidated interim financial statements are consistent with those
described on pages 74-76 of the Group's Annual Report and Financial
Statements for the 52 weeks ended 27 March 2021.
PRINCIPAL RISKS AND UNCERTAINTIES
The management of the business and the execution of the Group's
growth strategies are subject to a number of risks and
uncertainties that could adversely affect the Group's future
development. The principal risks and uncertainties for the Group,
and the key mitigating actions used to address them are consistent
with those outlined on pages 21-27 of the Group's Annual Report and
Financial Statements for the 52 weeks ended 27 March 2021.
ALTERNATIVE PERFORMANCE MEASURES
In reporting financial information, the Group presents
Alternative Performance Measure ("APMs"), which are not defined or
specified under the requirements of IFRS. The APM used by the Group
is adjusted profit/(loss) before tax.
The Group makes certain adjustments to the statutory profit or
loss measures in order to derive APMs. Adjusting items are those
items which, in the opinion of the Directors, should be excluded in
order to provide a consistent and comparable view of the
performance of the Group's ongoing business. Generally, this will
include those items that are largely one-off and material in nature
as well as income or expenses relating to acquisitions or disposals
of businesses or other transactions of a similar nature. Treatment
as an adjusting item provides stakeholders with additional useful
information to assess the year-on-year trading performance of the
Group.
A reconciliation of reported profit/(loss) before tax to
adjusted profit/(loss) before tax is set out below.
Audited
Unaudited Unaudited 52 weeks ended 27 March
26 weeks ended 25 26 weeks ended 26 2021
September 2021 GBP'000 September 2020 GBP'000 GBP'000
Reconciliation to adjusted
profit/(loss) before tax
Profit/(loss) before tax 10,212 (2,352) 4,554
Restructuring costs - 2,151 2,370
Store closure credit (5,700) (1,992) (3,702)
Impairment charge related
to property, plant and
equipment - - 590
Impairment charge related
to right-of-use assets - - 5,725
Lease modification - - (3,951)
Licence agreement exit
costs - 300 300
Adjusted profit/(loss)
before tax - non-GAAP
measure 4,512 (1,893) 5,886
Adjusted basic
profit/(loss) per share
(note 5) 6.8p (3.4p) 10.5p
Adjusted diluted
profit/(loss) per share
(note 5) 6.8p (3.4P) 10.5p
Restructuring costs
During the period, one-off charges of GBPnil (2020: GBP2,151,000) were incurred relating to
people restructuring costs.
Store closure credit
During the period, 1 international store (2020: 2 international stores) was closed. The credit/profit
on disposal is net of any closure and redundancy costs.
Licence agreement exit costs
During the period the Group incurred charges of GBPnil (2020: GBP300,000) from the write-off
of its ready-to-wear and footwear licence relating to final samples and materials on non-renewal
of the licence and distribution agreement for these lifestyle products.
3. GOING CONCERN
In determining whether the Group's accounts can be prepared on a
going concern basis, the Directors considered the Group's business
activities and cash requirements together with factors likely to
affect its performance and financial position.
The Group had net cash of GBP30.3 million (2020: GBP8.6 million)
and deferred liabilities of GBP5.0m (2020: GBP4.6m) at 25 September
2021 and had not drawn down on its revolving credit facility. The
Directors have also reviewed the 12-month forecasts including their
resilience in the face of possible downside scenarios.
Based on the assessment outlined above, the Directors have a
reasonable expectation that the Group has access to adequate
resources to enable it to continue to operate as a going concern
for the foreseeable future. For these reasons, the Directors
consider it appropriate for the Group to continue to adopt the
going concern basis of accounting in preparing the Interim Report
and financial statements.
4. TAXATION
The tax charge/(credit) is calculated by applying the forecast
full year effective tax rate to the interim profit(/loss) and
calculating the deferred tax balance for the period. The charge for
the 26 weeks ended 25 September 2021 also includes a charge of
GBP2.4m (2020: GBPnil) for the tax on the gain on disposal of an
intangible lease asset.
5. EARNINGS PER SHARE ('EPS')
Unaudited Unaudited Audited
26 weeks ended 26 weeks ended 52 weeks ended 27 March 2021
25 September 2021 26 September 2020
Basic profit/(loss) per share 12.2p (3.4p) 7.7p
Diluted profit/(loss) per share 12.2p (3.4p) 7.7p
Adjusted basic profit/(loss) per share 6.8p (3.4p) 10.5p
Adjusted diluted profit/(loss) per share 6.8p (3.4p) 10.5p
Earnings per share is calculated based on the following
data:
Unaudited Unaudited Audited
26 weeks ended 26 weeks ended 52 weeks ended
25 September 2021 GBP'000 26 September 2020 GBP'000 27 March 2021
GBP'000
Profit/(loss) for the period for basic
and diluted earnings per share 7,283 (2,022) 4,597
Adjustments to exclude exceptional
items:
Restructuring costs* - 1,757 1,931
Store closure credit* (3,242) (1,992) (3,611)
Impairment relating to retail assets - - 590
Impairment relating to right-of-use
assets - - 5,725
Lease modification* - (3,200)
Licence agreement exit costs* - 243 243
Adjusted profit/(loss) for the period
for basic and diluted earnings per
share 4,041 (2,014) 6,275
*These items are included net of tax
Unaudited Unaudited Audited
26 weeks ended 26 weeks ended 52 weeks ended 27 March 2021
25 September 2021 Million 26 September 2020 Million Million
Weighted average number of
ordinary shares for the
purpose of basic EPS 59.5 59.5 59.5
Effect of dilutive potential - - -
ordinary shares: share
options
Weighted average number of
ordinary shares for the
purpose of diluted EPS 59.5 59.5 59.5
The weighted average number of ordinary shares in issue during
the period excludes those held by the Employee Share Trust.
6. BUSINESS AND GEOGRAPHICAL SEGMENTS
IFRS 8 requires operating segments to be identified on the basis
of internal reports about components of the Group that are
regularly reviewed by the Chief Operating Decision Maker ("CODM"),
defined as the Board of Directors, to allocate resources to the
segments and to assess their performance. Inter-segment pricing is
determined on an arm's length basis. The Group also presents
analysis by geographical destination and product categories.
(a) Business segment
The Group has identified one reportable segment.
The principal activities are as follows:
The accounting policies of the reportable segment are the same
as described in the Group's financial statements. Information
regarding the results of the reportable segment is included below.
The distribution of product globally is monitored and optimised at
a Group level and effected via the Group's distribution centres in
the UK, Europe, North America and Asia. Performance for the segment
is assessed based on operating profit/(loss).
The Group designs, manufactures and manages the Mulberry brand
for the segment and therefore the finance income and expense are
attributable to this segment.
GROUP INCOME STATEMENT
26 WEEKS ENDED 25 september 2021
Note
Unaudited Unaudited Audited
26 weeks ended 26 weeks ended 52 weeks ended 27 March
25 September 2021 26 September 2020 2021
GBP'000 GBP'000 GBP'000
Retail 36,585 19,539 43,586
Digital 19,066 23,364 56,365
Wholesale 10,068 6,016 15,000
Total revenue 65,719 48,919 114,951
Cost of sales (20,326) (20,019) (41,879)
Gross profit 45,393 28,900 73,072
Impairment charge related
to property, plant and
equipment - - (590)
Impairment charge related
to right-of-use assets - - (5,725)
Store closure credit 5,700 1,992 3,702
Lease modification - - 3,951
Other operating expenses (39,960) (35,785) (71,638)
Other operating income 779 4,691 6,006
Operating profit/(loss) 11,912 (202) 8,778
Share of results of
associates 61 (32) (60)
Finance income 8 3 12
Finance expense (1,769) (2,121) (4,176)
Profit/(loss) before tax 10,212 (2,352) 4,554
Tax (charge)/credit 4 (2,929) 330 43
Profit/(loss) for the
period 7,283 (2,022) 4,597
Segment capital
expenditure 2,170 1,592 3,996
Segment depreciation and
amortisation 6,021 6,507 19,498
Segment assets 130,351 127,592 118,648
Segment liabilities 105,280 116,910 101,176
For the purposes of monitoring segment performance and
allocating resources between segments, the Chief Operating Decision
Maker, which is deemed to be the Board of Directors monitors the
tangible intangible and financial assets attributable to each
segment. All assets are allocated to the reportable segment.
(b) Geographical markets
Sales revenue by Non-current assets by
geographical market geographical market
(1)
Unaudited
26 weeks Unaudited Audited Unaudited Unaudited Audited
ended 26 weeks 52 weeks 26 weeks 26 weeks 52 weeks
25 September ended ended ended ended ended
2021 26 September 27 March 25 September 26 September 27 March
GBP'000 2020 2021 2021 2020 2021
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
UK 40,002 29,038 68,573 45,829 61,037 50,792
Rest of Europe 8,651 7,132 15,014 1,483 9,564 8,487
Asia 13,313 10,199 24,636 4,160 3,274 3,362
North America 3,562 2,368 6,261 3,941 1,144 811
Rest of world 191 182 467 - - -
Total revenue 65,719 48,919 114,951 55,413 75,019 63,452
(1) Revenue by geographical market includes wholesale sales
based on the location of the customer.
(c) Product categories
Leather accessories account for over 90% of the Group's
revenues, of which bags represent over 70% of revenues. Other
important product categories include small leather goods, shoes,
soft accessories and women's ready-to-wear. Net asset information
is not allocated by product category.
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END
IR FLFVDLILVFIL
(END) Dow Jones Newswires
November 24, 2021 01:59 ET (06:59 GMT)
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