TIDMMUL
RNS Number : 5525Q
Mulberry Group PLC
29 June 2022
Mulberry Group plc
Preliminary results for the 53 weeks ended 2 April 2022
Mulberry Group plc ("the Group" or "Mulberry"), the British
luxury brand, announces results for the 53 weeks ended 2 April 2022
(the "period").
THIERRY ANDRETTA, CHIEF EXECUTIVE OFFICER, COMMENTED:
"We have made great strides in our mission to be the leading
responsible British lifestyle brand, and a pioneer in
sustainability. Mulberry continues to delight customers with our
beautiful products, made to last with the highest quality, lowest
carbon materials in our UK factories.
"The strength of our financial results reflects positive
customer response to our product as well as the strategic decisions
we have made over the past five years, and I want to take this
opportunity to thank my colleagues for their commitment and
contribution to the business.
"Whilst the economic and geo-political outlook remains
uncertain, we are an iconic international brand with a clear
strategy for future profitable, cash-generative growth. We remain
well placed to continue to deliver sustainable returns to the
benefit of all our stakeholders."
Financial Highlights
-- Group revenue up 32% to GBP152.4m (2021: GBP115.0m)
reflecting strong recovery post COVID-19
-- Gross margin of 71.7% (2021: 63.6%)
-- UK retail sales increased 36% to GBP89.8m (2021: GBP66.2m)
-- China retail sales up 59% and South Korea retail sales up
11%, which contributed to the 28% increase in Asia Pacific retail
sales, reflecting ongoing development in the region. International
retail sales increased 20% to GBP40.4m (2021: GBP33.8m)
-- Digital sales GBP47.5m (2021: GBP56.4m) down 16% as customers
switched back to stores following store re-openings; however up 31%
compared to pre-COVID-19 levels (2020: GBP36.3m)
-- Profit before tax GBP21.3m (2021: profit before tax GBP4.6m)
includes a one-off profit on disposal of Paris lease of GBP5.7m
-- The Board is proposing a final dividend of 3 pence per ordinary share (2021: nil)
Operating Highlights
-- Improved margins due to strategic focus on full price sales
and increased volume efficiencies
-- Digital sales represented 31% of total revenue (2021: 49%),
as customers migrated to back to stores, however this was up from
24% in 2020, reflecting the ongoing strength of this channel
-- During the period five new stores were opened in China, and
four in South Korea, further supporting our ongoing growth and
development in the Asia Pacific region
-- Business and infrastructure responded well to increased
demand following the easing of COVID-19 restrictions
-- Launch of the new Softie bag family in February 2022
Sustainability Highlights
-- "The Lowest Carbon collection" was launched in November 2021,
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
-- Successful launch of our resale programme "Pre-loved Bags", across all channels
-- 88% of the collection now using leather sourced from
environmentally accredited tanneries; this will increase to 100% by
end of 2022
-- Further investment in the Lifetime Service Centre at The
Rookery, which is now restoring more than 10,000 bags a year
Current Trading and outlook
-- Group revenue for the first 12 weeks of the new financial
year is 5% ahead of last year, supported by our wholesale business
up 29%. Omni-channel (retail and digital) revenue is down 1%,
largely as a result of COVID-19 restrictions in mainland China,
including the closure of the majority of stores and our Shanghai
distribution centre
FOR FURTHER DETAILS PLEASE CONTACT:
Mulberry Group plc
Charles Anderson (Group Finance TEL: +44 (0) 20 7605 6793
Director)
Headland (Public Relations)
Lucy Legh / Kirsty Carruthers TEL: +44 (0) 20 3805 4822
mulberry@headlandconsultancy.com
Houlihan Lokey UK Limited (NOMAD)
Tim Richardson TEL: +44 (0) 20 7484 4040
Chairman's Letter
Dear Shareholder,
Mulberry has achieved solid growth and significantly increased
profits, with strong cash generation. We have been successful in
tackling the many challenges confronting our sector and sales
returned to pre-COVID-19 levels.
The strategic decisions taken over the last few years are
bearing fruit and contributing to our long-term resilience.
Investments in omni-channel distribution, and the expansion in
Asia-Pacific, where our businesses continue to make good progress,
are delivering a growing contribution. The focus on full-priced
sales of high-quality, sustainable products continues to increase
margins, and enhances our appeal to our global customer base.
The Board is proposing to recommence paying a dividend, and is
recommending a final dividend for the 53 weeks ended 2 April 2022
of 3 pence per ordinary share, to be paid (subject to shareholder
approval) on 25 November 2022 to shareholders on the register at 28
October 2022.
We have advanced our mission to be the leading responsible
British luxury lifestyle brand and a pioneer in sustainability.
Indeed, we are making huge steps towards achieving this. In April,
on World Earth Day, we launched our Made to Last Manifesto, which
outlines our vision and sustainability targets. It is a commitment
to responsible innovation, and a philosophy that goes to the very
heart of our brand's identity, and our purpose to create value and
make a positive difference for all our stakeholders.
Looking forward, the Group is in a strong financial position,
with the strategic decisions of the last few years driving
profitable cash-generating growth. However, we live in very
uncertain times, with burgeoning inflation and the appalling war in
Ukraine. Despite these headwinds, we are confident we will continue
to build our business and add value for our shareholders in the
medium term.
I would like to take this opportunity to thank all the team for
their hard work and ongoing commitment as we continue to build our
business together.
Godfrey Davis
Chairman
28 June 2022
Strategic Report
Chief Executive's Statement
OVERVIEW
I am pleased to report a strong performance for Mulberry during
the past year and want to take this opportunity to thank my
colleagues for their hard work and commitment. Despite a range of
external challenges and continuing macro-economic uncertainty, we
have delivered a robust set of results. The decisions we've taken
in developing our long-term strategy - to focus on innovative and
sustainable products made in our carbon-neutral Somerset factories,
to invest in omni-channel distribution, and to expand into the
Asia-Pacific region - are relevant in a post COVID-19 era and
support our progress towards becoming a sustainable global luxury
brand.
PROGRESS AGAINST OUR STRATEGY
During the period we have continued to focus on growing our
international markets particularly the Asia Pacific region,
investing in new stores and additional marketing, growing brand
awareness and focusing on the younger generation of luxury
customers.
The Made to Last Manifesto sets Mulberry apart from our
competition. In November 2021 we launched "The Lowest Carbon
collection", and our re-sale programme "Pre-Loved Bags" is now
available across all channels. Today 88% of our collections now use
leather from environmentally accredited tanneries, and this will
increase to 100% by the end of 2022.
We continue to focus on our direct-to-customer model, however
despite this Wholesale and Franchise sales increased 48% in the
period as our remaining partners benefited from increased demand as
COVID-19 restrictions eased.
Our brand continues to resonate with our customer base, as a
result of the unique combination of British heritage and global
outlook. At the core of this are our outstanding products, made
sustainably and with the highest quality materials in our UK
factories.
We navigated the pandemic well, and the combination of our agile
and flexible supply chain, with our market-leading digital offer
stood us in good stead as restrictions eased. With our omni-channel
approach giving customers choice, convenience and a better
all-round experience, we have been able to weather the various
challenges our sector has faced. In addition, greater emphasis on
our direct-to-consumer operating model and reducing our reliance on
wholesale, has enabled us to control our supply chain and bolster
our resilience further.
STRONG TRADING PERFORMANCE
Sales in the UK recovered strongly once stores re-opened, and
this continued throughout the year. During the peak trading period,
sales exceeded last year, as we saw the benefits of our made in the
UK production supply chain, the relaunch of the Alexa family of
products, and our festive marketing campaign. Our strategic
decision to focus on full-price sales, was the key driver behind
the increased in gross margin.
China retail sales were up 59%, with digital sales representing
42% of China sales, contributing to Asia Pacific retail sales
increasing 28%, driven by ongoing investment in the region.
Franchise and Wholesale increased by 48% as our Franchise
partners benefited from the post COVID-19 recovery and increased
demand following the easing of restrictions.
OPERATIONAL PERFORMANCE
Our in-depth understanding of our customers - both traditional
Mulberry buyers and the new generation of digital shoppers - has
enabled us to develop a product range tailored to their varying
preferences. The emphasis is on high quality and full-price sales,
as we champion beautiful products, made to last, in our
carbon-neutral Somerset factories. This focus has ensured our
resilient performance in spite of the challenging market conditions
of recent years. One particular success from the past year has been
our Softie bag family, launched in February 2022.
Internationally, our continuing growth in Asia helped us further
diversify our business. Even though extended COVID-19 restrictions
in the Asia-Pacific region inhibited Q4 performance, we succeeded
in mitigating the impact across our markets, largely through our
omni-channel distribution strategy.
By strengthening our UK manufacturing capabilities and
controlling our own supply chain, we are less vulnerable to
interruptions and delays than many others in the industry.
MADE TO LAST
As outlined in our Made to Last Manifesto, we aim to reach zero
carbon emissions by 2035. We will achieve this through product
innovation, and by embracing the principles of the circular
economy. Our intention is to transform the business to a
regenerative and circular model encompassing the entire supply
chain, from field to wardrobe by 2030.
Our sustainable-product launches of the past year include our
Lowest Carbon Collection. Introduced in November 2021, these
products are crafted from low-carbon leather (the lowest available
at launch) and use a local supply chain, based on a network of
organic farms. In May 2022, Lily Zero became our first range to
feature carbon-neutral leather.
Overall, 88% of our products now use leather and suede sourced
from environmentally accredited tanneries, and we are on track to
increase this to 100% by the end of this year. We're also working
with organisations such as the Leather Working Group and the
Sustainable Leather Foundation, who support best practice in animal
welfare, traceability, and environmental management. All the
non-leather materials we use are also fully sustainable.
Supporting circularity, our Lifetime Service Centre - where
customers can have their products repaired and renewed - now
restores more than 10,000 bags a year. Also, our resale programme,
Pre-loved Bags, helps ensure many of our products are used and
valued for generations. Our buy-back scheme, The Mulberry Exchange,
enables customers to return their Mulberry bag and receive a credit
towards a new one.
FINANCIAL PERFORMANCE
Our strategy to increase full-price sales helped improve our
financial performance during the year. This combined with our agile
supply chain resulted in significantly less end of season inventory
and a reduction in discounting in the sale periods and our outlet
stores compared to previous years. This strengthened our cash
position, enabling us to invest more in the business. We continue
to refine our store network and our cash position was materially
strengthened by the profit on disposal of our Paris lease in July
2021.
Group revenue increased by 32% over the prior year, slightly
ahead of pre-COVID levels, and profit before tax was GBP21.3m
(2021: profit before tax GBP4.6m), which included a one-off profit
on disposal of Paris lease of GBP5.7m. The financial strength of
the Group, reflects the benefits of the mitigating steps we took
during the pandemic and the positive consumer reaction to our
products.
Our business and infrastructure responded well to the growth in
demand following the easing of COVID-19 restrictions. Digital sales
were 31% of Group revenue in the period, lower than last year when
stores were closed, but up from 24% in 2020, reflecting the ongoing
strength of this channel. China retail sales increased by 59% and
South Korea retail sales increased by 11%, helping us reach 28%
growth in overall Asia-Pacific retail sales.
Gross margin increased to 71.7% (2021: 63.6%) supported by our
strategic focus on full-price sales and increased volume
efficiencies. We ended the year in a strong cash position, with net
cash of GBP25.7m (2021: GBP11.8m) and deferred liabilities of
GBPnil (2021: GBP4.7m).
In view of this encouraging performance, and the Group's
substantial cash reserves, we progressively increased marketing
expenditure to continue building global brand awareness.
Projects are also in place to move the Group's legacy systems
forward, and to develop the next generation of digital and
omni-channel platforms. We expect this to require increased capital
expenditure in the current year and beyond.
CURRENT TRADING AND OUTLOOK
Group revenue for the first 12 weeks of the new financial year
is 5% ahead of last year, supported by our wholesale business up
29%. Omni-channel (retail and digital) revenue is down 1%, largely
as a result of COVID-19 restrictions in mainland China, including
the closure of the majority of stores and our Shanghai distribution
centre. We expect the business to continue to grow, albeit at a
slower rate given the severe disruption being caused by the
geo-political situation, inflationary pressures, and Brexit-related
challenges. Notwithstanding the broader operating environment, we
are confident in our strategy, have strong liquidity and continue
to invest including further store openings across the network
planned later this year. We remain focused on reaching our goal to
be the leading sustainable global luxury brand, to the benefit of
all our stakeholders.
Thierry Andretta
Chief Executive Officer
28 June 2022
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
We continue to invest in further enhancements to our
omni-channel approach. This includes selective store openings,
continued roll-out of our new Mulberry store concept, and further
enhancements to our digital network. Our new store concept enables
us to better display and promote our collections through innovative
customer-facing technology. It creates more space and supports our
omni-channel proposition, and has helped to elevate our brand
position, outperforming more traditional outlets.
Most of our retail stores had reopened not long after the start
of the financial year, other than a few localised restrictions. We
have continued to refine the retail network, ending the year with
107 points of sale. This included opening ten stores
internationally, all in our new store concept. There were fifteen
closures during the year, including the early exit of our Paris
store.
In the UK, we operated 40 retail stores (own stores and
concessions run by our employees) at the year end, which included
15 John Lewis and seven House of Fraser concessions. UK retail
sales benefited from providing the customer with a single view of
inventory, which has increased the proportion of full-price sales.
We continued offering virtual and in-store appointments, and these
led to 8% of all UK store sales and resulted in a larger average
transaction value than walk-in customers.
During the year, 31% of Group revenue came from digital sales,
demonstrating the continuing trend towards digital and omni-channel
shopping across all regions. In Asia Pacific, digital sales were
21% of the region's sales, and are now supported by local
fulfilment in Japan and Korea, and a concession gift channel with
Korean messenger platform Kakao.
In China, we switched e-commerce (Tmall) partner to Baozun,
China's largest and most renowned Tmall company, to support our
full-price strategy and overall digital marketing. As a
consequence, full-price sales through this channel were 75% in
March 2022, compared to 20% in the previous March, and overall new
customer numbers increased by 58%. China digital sales grew 64%,
representing 42% of total China sales. In July 2021, we also
launched a WeChat programme in China, capturing 21,500 new accounts
and, in the final four months of the year, gained over 5,000
followers from the Red platform, which has 200 million active
users, 70% of them female . This is all part of a long-term
programme of building brand awareness in the region, with content
regularly updated and tailored to relevant campaigns, products and
customers.
STRATEGIC PILLAR 2
International Development
In Asia Pacific, we operated 37 retail stores at the year end
(2021: 35). Asia Pacific retail sales increased by 28%, thanks to
our ongoing investment in the region. China retail sales are up
59%, South Korea 11% and Japan 19%, though retail sales in South
Korea and Japan were disrupted to some extent by regional and local
lockdowns. Higher sell-throughs and reduced mark-down periods also
contributed to this success as well as better positioning for the
brand.
Our investment in subsidiaries supported overall growth, with
China and South Korea making further progress in the year. During
the period, we opened five retail stores in China and four in South
Korea. These present our new store concept, which features design
elements that represent our distinctive British heritage. The five
stores in China were Beijing World Financial Centre, Beijing Shin
Kong Place, Wuhan Heartland 66, Shanghai International Finance
Centre, and Chengdu International Finance Square. Following a
deliberate strategy, almost all are in China top 10 shopping malls,
with these flagship stores offering a greater margin than the
average across Greater China. The openings further enhance brand
awareness, strengthen our luxury positioning, and support our
full-price strategy.
The same approach applies to South Korea, where we opened stores
in Shinsegae Dae-jun and Shinsegae Gyoung-gi, taking advantage of
the major investments Shinsegae has made in its department store
network, where we can accompany other key luxury brands in
ground-floor positions. During the year, we 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 that supports our omni-channel approach and customer
experience aims.
STRATEGIC PILLAR 3
Constant Innovation
In September 2021, we launched the Sadie family, a timeless
satchel with our new 'Typography Lock', and the Billie family, a
youthful cross-body slouched bag. Both families are crafted from
leather sourced from our environmentally accredited tanneries
credentials with Leather Working Group ratings. Then in February
2022, after a year of design work and materials trials of Turkish
and Italian leather and feathers, we launched the new Softie
quilted bag.
As part of our 50th anniversary celebrations we have
collaborated with three of the most visionary designers of their
generation - Priya Ahluwalia, Richard Malone and Nicholas Daley.
Each has created a collection as part of Mulberry Editions, a new
range of limited-edition accessories we offered throughout 2021.
Crafted entirely from surplus fabrics and leather, the Mulberry x
Ahluwalia collection mirrors the Portobello Tote, our first 100%
sustainable leather bag, with a range of 12 versions, featuring
embroidery and patchwork. Richard Malone reinvented the iconic
Bayswater, updating its timeless detailing in a range of 14,
crafted with our sustainable Eco-Scotchgrain, made from recombined
bio-plastic materials, and embossed with a distinctive pebble grain
finish. Nicholas Daley reworked one of our most recognisable bags,
the Antony, with a series of accessories inspired by reggae, jazz
and rock 'n' roll, as well as details that reflect his own Jamaican
and Scottish heritage.
STRATEGIC PILLAR 4
Sustainable Lifecycle
Since 2019, we have offset 1,982.14 tonnes of carbon (tCO e)
through World Land Trust's Carbon Balanced project in Guatemala,
which supports long-term protection and restoration of threatened
tropical forests. This is just a small step towards our aim of
becoming net zero by 2035, and we are continuing to investigate
generating our own energy by installing additional solar panels at
our Somerset factory sites. In July, we agreed to set science-based
targets through the SBTi, joining over 650 global businesses
working to hold the temperature rise to 1.5degC above
pre-industrial levels.
We also take a responsible approach in our manufacturing
processes and standards, upholding and protecting our heritage in
leather craftsmanship, while using technology such as the latest
digital cutting machines to reduce waste from leather cutting. We
ensure we divert any unrecyclable waste from landfill. We
manufacture over 50% of our bags in the UK, the remainder in Europe
and Asia. During the year, 88% of our range used leather and suede
sourced from environmentally accredited tanneries, with the aiming
of reaching 100% by the end of 2022.
We are members of the Sustainable Leather Foundation, which aims
for more sustainable practices in leather manufacture and
production, and are represented on their Advisory Board. We also
continue to be a member of Better Cotton, the largest cotton
sustainability programme in the world. Our target is for all our
cotton to be sustainably sourced by 2025 recycled, organic or
Better Cotton. We also joined Textile Exchange's Sustainable Cotton
Challenge.
Our world-class Lifetime Service Centre in The Rookery, one of
our Somerset factories, plays a key role in our aim for a fully
circular product and service offer, breathing new life into
thousands of pre-loved Mulberry items every year - including more
than 10,500 items this year . In addition, in 2020 we launched The
Mulberry Exchange, our circular buy-back and resale programme. This
aims to restore Mulberry classics for a new owner, giving customers
the chance to return their pre-loved bags in any Mulberry store or
by sending to us, in exchange for credit towards a new purchase.
Each bag returned is given a second lease of life, restored
carefully by expert craftspeople at the Lifetime Service Centre,
and resold through selected Mulberry stores and mulberry.com . Any
bags not fit for repair we send to Scottish Leather Group for
energy reclamation, powering the production of new leather to make
our next bags.
Financial review
Our results for the 53 weeks ended 2 April 2022 reflect our
strong recovery post COVID-19, increased demand following the
easing of restrictions and a strategic focus on full price
sales.
By 12 April 2021, all our stores worldwide were reopened
following a second wave of global lockdowns due to COVID-19,
although our stores and distribution centre in China were disrupted
from 14 March 2022 as a result of further COVID-19
restrictions.
GROUP REVENUE AND GROSS PROFIT
53 weeks 52 weeks
ended ended
2 April 2022 27 March 2021
GBPm GBPm %
Digital 47.5 56.4 (16%)
Stores 82.7 43.5 90%
Retail (omni-channel) 130.2 100.0 30%
-------------- ----------------------------------------------------- ------
Wholesale and Franchise 22.2 15.0 48%
-------------- ----------------------------------------------------- ------
Group Revenue 152.4 115.0 32%
-------------- ----------------------------------------------------- ------
Digital 35.7 44.6 (20%)
Stores 54.1 21.6 151%
UK 89.8 66.2 36%
-------------- ----------------------------------------------------- ------
Digital 5.8 3.8 54%
Stores 22.2 18.0 23%
Asia Pacific 28.0 21.8 28%
-------------- ----------------------------------------------------- ------
Digital 5.9 8.0 (26%)
Stores 6.4 3.9 62%
Rest of world 12.3 11.9 3%
-------------- ----------------------------------------------------- ------
Total Retail 130.2 100.0 30%
-------------- ----------------------------------------------------- ------
UK 4.2 2.4 75%
Asia Pacific 3.9 2.8 39%
Rest of World 14.1 9.8 44%
Wholesale and Franchise 22.2 15.0 48%
-------------- ----------------------------------------------------- ------
Group revenue for the period increased by 32% over the prior
period and was 15% above 2020 (pre COVID-19) on a comparable basis
(adjusting for store openings and closures). In the UK, total
retail sales recovered strongly and were 14% above 2020 on a
comparable basis. UK digital sales declined by 20% year-on-year as
stores re-opened, but represented 40% of UK retail sales, compared
to 30% in 2020, reflecting the accelerated shift to digital and
omni-channel shopping.
China retail sales increased 59%, which contributed to the 28%
increase in Asia Pacific, driven by ongoing investment in the
region. China digital sales represented 42% of China retail
sales.
Franchise and wholesale sales increased by 48% as our Franchise
partners benefited from the post COVID-19 recovery and increased
demand following the easing of restrictions.
Gross margin for the period increased to 71.7% (2021: 63.6%)
driven by a strategic focus on full-price sales and increased stock
efficiencies.
KEY PERFORMANCE INDICATORS
Key performance indicators (KPIs) help management measure
progress against our strategy. Currently the focus is on financial
KPIs which include total revenue, gross margin and profit, all of
which are discussed within this financial review.
OTHER OPERATING EXPENSES
Other operating expenses in the period increased by 22% to
GBP85.9m (2021: GBP70.3m) due to further marketing spend to support
international growth and additional revenue related costs.
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 is GBPnil (2021: GBP4.8m)
of grants receivable under HM Revenue & Customs Coronavirus Job
Retention Scheme (CJRS) and GBP0.5m (2021: GBP0.5m) from equivalent
schemes offered in other non-UK territories. As a result of the
progress that has been made, the Group has taken the decision not
to claim our entitlement to CJRS in the current period.
PROFIT BEFORE TAX
The Group's profit before tax for the period was GBP21.3m (2021:
profit before tax GBP4.6m). An adjusting item of GBP6.8m (2021:
GBP1.3m) for store closure credits (2021: credit) relates to the
release of lease liabilities and profit on disposal of the Paris
lease net of related costs.
TAXATION
The Group reported a tax charge of GBP2.2m (2021: credit
GBP43k), an effective rate of tax of 10% (2021: (1%)). This tax
charge largely resulted from French taxation on the gain on
disposal of the lease in Paris. The effective tax rate is lower
than the UK tax rate of 19%, primarily due to the use of prior year
tax losses, which were not recognised as a deferred tax asset.
DIVIDS
The Board is proposing a final dividend of 3 pence per ordinary
share for the 53 weeks ended 2 April 2022 (2021: nil) to be paid
subject to shareholder approval, on 25 November 2022 to
shareholders on the register at 28 October 2022.
CASHFLOW
The net increase in cash and cash equivalents of GBP13.9m (2021:
GBP4.2m) comprises cash received on exit of the Paris lease, and
working capital benefits, partially offset by increased
inventories, and capital expenditure. During the year the Group
paid GBP13.7m (2021: GBP7.7m) relating to the principle element of
lease liabilities, which included GBP4.7m of deferred lease
liabilities from the prior period.
BORROWING FACILITIES
The Group's net cash balance (comprising cash and cash
equivalents, less overdrafts) at 2 April 2022 was GBP25.7m (2021:
GBP11.8m), with deferred liabilities of GBPnil (2021: GBP4.7m). Net
cash comprises cash balances of GBP25.7m (2021: GBP11.8m) less bank
borrowings of GBPnil (2021: GBPnil), which excludes loans from
related parties and non-controlling interests of GBP5.0m (2021:
GBP4.7m) Net cash also excludes lease liabilities of GBP63.7m
(2021: GBP73.9m) as this gives more clarity over the net cash
balance and liabilities are not considered to be borrowings.
Since the period end the Group has extended its revolving credit
facility with HSBC until March 2024, and banking covenants remain
unchanged. The GBP15.0m revolving cash facility is secured, and
covenants are tested on quarterly basis and contain a net debt to
EBITDA ratio, and a fixed charge cover ratio. Covenants are tested
on a "frozen GAAP" basis and exclude the impact of IFRS16. In
addition, the Group has a GBP4.0m overdraft facility and a further
USD 1.9m overdraft facility in China, which are renewed
annually.
Corporate Social Responsibility - Made To Last
In 2021, we celebrated 50 years of Mulberry. As part of the
celebrations, we launched our Made to Last Manifesto. It's a
commitment to responsible innovation, and a philosophy that goes to
the very heart of what we do in every part of the business. From
sourcing and manufacturing, to our relationships with the
communities around us, we continue to strive for the best
sustainable practices.
Our sustainability strategy
Made to Last is also the name given to our business
sustainability strategy. It's evolved from our previous policies
and practices that aimed for a responsible and sustainable future.
It focuses on the following key pillars:
1. Net Zero Future - the very centre of our strategy, aiming for net zero carbon emissions by 2035.
2. Regenerative Sourcing - we will source all materials responsibly, trial and introduce material innovations, and
transform to a regenerative business model.
3. Net Zero Manufacturing - we will measure our impact so we can protect the environment and the livelihoods within
our supply chain.
4. Product Circularity - we will strengthen our offers that aim for a fully circular product lifecycle, to reduce
waste and encourage sustainable consumption.
5. Inclusive Communities - we will positively impact our communities and work for a more diverse, equitable and
inclusive future.
A summary follows here, and you can read further detail in our
stand-alone Sustainability Report available on the Responsibility
pages of Mulberry.com;
https://www.mulberry.com/row/madetolast/responsibility.
1. Net Zero Future
During 2021, we worked with the Carbon Trust to measure our
global carbon footprint across Scopes 1, 2 and 3, using FY2019-20
as a baseline. Scope 1 relates to emissions from operations in our
direct control, while Scope 2 is indirect emissions from energy
purchased. Scope 3 relates to indirect emissions from the value
chain not in our control, and not included in Scope 2, such as in
raw materials and business travel.
Results showed that just 7% of our emissions related to Scope 1
and 2, and 93% of our emissions occur in Scope 3.
SCOPE 1 AND 2
We have already made some progress addressing these by
installing:
-- solar panels on the roof of The Willows factory
-- LED lighting fixtures with light and motion sensors, in factory, warehouse and office sites
-- LED lighting in 33% of our store network
-- electric vehicle charging points at The Rookery.
Since 2019, we have offset our UK Scope 1 and 2 carbon footprint
through World Land Trust's Carbon Balanced programme.
The split of our emissions is as follows:
Stores 33%
Factories 32%
Offices 20%
Warehousing 11%
Vehicles 4%
SCOPE 3
It's more difficult to access data further down the supply
chain, making it essential to collaborate with suppliers to reduce
our carbon emissions.
To begin with, we are addressing our Scope 3 emissions by:
-- surveying our Tier 1 and 2 product suppliers regularly to
better understand their environmental practices
-- setting targets for our retail stores to increase their recycling rate
-- introducing a hybrid-working policy for employees, to reduce commuting emissions
-- updating our travel policy to promote more financially and
environmentally sustainable travel behaviour.
SCIENCE-BASED TARGETS
We have developed science-based targets with the Carbon Trust,
and will submit them during 2022 for approval by the Science-Based
Target initiative. The targets show companies how much and how
quickly they need to reduce their greenhouse-gas emissions to
prevent the worst effects of climate change. They are aligned to
the most recent climate science, which currently advises limiting
global warming to less than 1.5 degC.
2. Regenerative Sourcing
SUSTAINABLE LEATHER
Leather goods are the foundation of our business and comprise
over 90% of our collection. We source finished leather directly
from tanneries in the UK, Italy, Germany, Spain and Turkey. In
2020, we joined the Sustainable Leather Foundation (SLF) as a
founding partner. As well as assessing a leather manufacturer's
environmental credibility, SLF reviews their social performance and
governance, offering us a holistic view of sustainability matters.
We aim to source all our leather from accredited sources by 2023,
by which we mean tanneries with a valid Leather Working Group
audit, Sustainable Leather Foundation audit or ISO:14001
accreditation.
In November, we launched our first 'farm to finished product'
bags, in collaboration with Scottish tannery, Muirhead, a member of
Scottish Leather Group, which make the world's
lowest-carbon-intensity leather, at 1.1kg of CO2 per hide.
We continue to invest in establishing and growing this approach
by working with organisations including the Leather Working Group
and the Sustainable Leather Foundation, who support best practice
in animal welfare, traceability, and environmental management.
MATERIAL INNOVATION
We source a variety of fabrics, materials and other components
to create our collections, and look to ensure their credentials
align with our low-impact materials strategy. Our approach so far
has been to make rolling changes to our conventional materials,
such as cotton, as we develop each seasonal range, to improve its
sustainability credentials.
SOURCING TRANSPARENCY
Our international supply chain is based on sourcing quality raw
materials and finished products which meet our quality and
environmental expectations. Alongside our UK manufacturing
facilities, we source from a select group of long-standing partners
in Italy, Turkey, China, and Vietnam. We work with countries that
have established skills and heritage within the leather industry,
and that can support our high-quality standards and progressive
new-product-development programmes.
All our suppliers have signed up to our Global Sourcing
Principles, which set out our minimum requirements for conducting
business, including those of international law such as the ILO's
four fundamental principles for rights at work: no child labour, no
forced labour, no discrimination, and the right to freedom of
association and collective bargaining.
For Mulberry products arriving at our warehouses in 2021, 43%
were sourced from suppliers we've worked with for more than ten
years, and 53% from suppliers we've worked with for more than five
years.
3. Net Zero Manufacturing
MADE IN THE UK
Our presence in the south-west of England harks back to our
beginnings in 1971. The Rookery opened in Chilcompton in 1989, and
is our centre of excellence for product development, and home to
our development team, artisan studio and Lifetime Service Centre.
Our second UK factory, The Willows, opened in Bridgwater in 2013
and is our main production site in the UK, housing seven production
lines. At The Willows and The Rookery, we employ more than 350
people. Craftspeople joining follow a comprehensive training
programme that equips them with the skills needed to craft Mulberry
bags, whether that's cutting leather, edge inking, stitching or
quality inspection.
Both The Rookery and The Willows have been carbon-neutral since
2019 and we generate a portion of the electricity for The Willows
from solar panels on the roof. Both sites work with partners who
ensure no unrecyclable waste goes to landfill and is recovered as
energy instead. The cutting machines we use minimise our cutting
waste, and we donate any unusable leather offcuts to local craft
groups, schools and scrap stores. We regularly host educational
tours for colleges and university classes.
WATER AND CHEMICAL MANAGEMENT
Our manufacturing chain requires tanning agents, adhesives and
cleaning products. We ensure our suppliers follow strict
chemical-management practices, and also maintain our own
restricted-substance list set to the strictest legal limits in the
markets where we sell our products.
We used World Wildlife Fund's Water Risk Filter to map our water
consumption and risk for both our UK factories. Currently we are
classed as low risk. To help us remain at this level, we use a
rainwater harvesting tank at The Rookery for toilet flushing.
4. Product Circularity
THE MULBERRY EXCHANGE
We create Mulberry bags to last a lifetime and be handed down to
the next generation. However, we also believe a change or exchange
can be positive. We launched The Mulberry Exchange in 2020 to
restore Mulberry classics authentically for a new owner, while
giving customers the chance to return their pre-loved bags in
exchange for credit towards a new purchase.
We sell the restored bags in stores and online, and were one of
the first brands to use re-sale platform Vestiaire Collective,
which showcases and sells second-hand limited-edition and rare
pieces.
REPAIRS AND RESTORATION
The team at the Lifetime Service Centre at The Rookery are
masters of restoration, breathing new life into thousands of
pre-loved Mulberry items every year. If an item is beyond repair,
we will offer to buy it back and reclaim the energy through
Scottish Leather Group, who have a thermal energy-reclamation
plant.
WASTE AND RECYCLING
In the UK, we work with providers such as Biffa and First Mile
to process any non-recyclable waste that would traditionally go to
landfill, to create electricity for the National Grid. We send our
mixed recycling for sorting so it can be reprocessed into new
products.
We have a zero-tolerance policy on destroying quality goods. We
divert unsold seasonal stock to our global network of outlet
stores, and also hold an annual employee sale of samples and stock,
with proceeds added to our Somerset Community Fund, or other
charitable causes.
We create our green carrier bags from cupcycling, an innovative
technology that repurposes coffee cups into paper, while also
separating the cups' plastic lining for recycling. Since we
started, we have repurposed over 2.8 million coffee cups that would
otherwise have been sent to landfill.
All our customer-facing packaging will be recyclable by the end
of 2022. We are also working to reduce the amount of cardboard we
use for packaging, and to eliminate all plastic from our
business-to-business operations. In addition, we are currently in
the process of changing our ribbon and handles for our carrier bags
to a material that will be compostable and biodegradable.
5. Inclusive Communities
CULTURE AND WELLBEING
All our employees are ambassadors for Mulberry and we encourage
them to live our employee values, which we believe help foster a
culture of wellbeing and acceptance, where everyone is celebrated
for their individuality. In our culture and environment, all
employees can thrive, irrespective of their gender identity, sexual
orientation, marital and civil partnership status, parental status,
race or ethnicity, religion or religious belief, political opinion,
physical appearance, age or disability. All our employees can
access our intranet - The Tree - where we post company information,
updates and employee achievements, and encourage communication.
DIVERSITY, EQUITY, AND INCLUSION
To ensure we are successful in creating this environment for our
employees, our Diversity and Inclusion (D&I) Committee meets
regularly to discuss our D&I Strategy, as well as current news,
personal experiences and those of our colleagues. The committee
also works with the marketing department to create a communications
calendar, recognising key moments such as International Women's
Day, Mental Health awareness, Pride and Black History Month. This
helps us reflect on and celebrate the success of our diverse
employees.
GER EQUALITY
Our most recent Gender Pay Gap report shows our mean hourly rate
gap as GBP7.34 per hour (in favour of men) and our median hourly
rate gap represented a difference of GBP0.25 per hour (in favour of
men). Our median hourly pay gap of 2.1% is significantly better
than the Office for National Statistics measure for the wholesale
and retail industry of 13.6%, and the retail sector benchmark of
7.4%.
Our Management Board is made up of three women and five men.
Combined with our broader leadership team, there are 30 women and
15 men at a senior level in our organisation.
Our recently enhanced maternity-pay benefit has increased leave
at full pay from 12 weeks to 18 weeks and reduced the length of
service to qualify for this benefit to one year. We have also
introduced more family-friendly policies, including leave for IVF
treatment, and continue to review all people policies to make them
more inclusive.
LIVING WAGE EMPLOYER
We are an accredited Living Wage Employer, so all our employees
in the UK will earn higher than the government's minimum wage.
Living Wage is an independently calculated hourly pay rate based on
the actual cost of living, calculated each year by the Living Wage
Foundation.
APPRENTICESHIPS
Since 2006, we have operated a leather goods manufacturing
apprenticeship programme in conjunction with Bridgwater and Taunton
College, which we run at The Willows and The Rookery. In 2017, we
were Lead Employer in a national trailblazer group, developing the
Level 2 Leather Craftsperson Standard apprenticeship, which has
since become industry-recognised, offering graded results for
apprentices in the leather goods' industries. All our apprentices
who have taken this new standard have achieved distinctions.
Our progress so far
LEATHER
-- By the end of 2022, we will source all our leather from
environmentally accredited tanneries
-- Currently, we source 88% of our leather from environmentally accredited tanneries
-- We are a founding partner of the Sustainable Leather
Foundation, and members of Leather Working Group since 2012
Link to theme 2
OTHER LOW-IMPACT MATERIALS
-- All nylon sourced as 100%-certified recycled nylon or ECONYL since spring 2020
-- Launch of Eco Scotchgrain range in April 2021, made from recombined bio-plastic materials
-- Launch of sunglasses made from biodegradable and recyclable
cellulose acetate in spring 2021
-- Launch of our Softie bag in spring 2022, using down and
feather certified to the Responsible Down Standard
Link to theme 2
CARBON
-- All UK operations carbon-neutral since 2019
-- Working with charities such as the World Land Trust to ensure efficient offsetting
-- Somerset factories work with Zero Waste to Landfill
providers, recovering energy from waste that cannot be reused or
recycled
-- Signatory of UN Fashion Industry Charter for Climate Action
-- During 2021, we worked with the Carbon Trust to measure our
global carbon footprint across Scopes 1, 2 and 3
Link to theme 1, 3
PRODUCT CIRCULARITY
-- Launched circular resell and buy-back programme, The Mulberry Exchange, in February 2020
-- Launched on Vestiaire Collective's Brand Approved programme in March 2021
-- Lifetime Service Centre restored over 10,000 bags in FY 2021-22
Link to theme 4
PACKAGING
-- Cupcycling introduced into customer packaging in January
2020, using over 1.5 million coffee cups to make Mulberry Green
paper
-- All our paper and card is FSC-certified
-- All customer-facing packaging will be recyclable at kerb-side by end of 2021
Link to theme 4
PEOPLE AND COMMUNITY
-- We grant all employees two days of paid volunteering each year.
-- We have raised GBP44,213 so far for The Felix Project,
through our customer-facing festive campaigns and employee
fundraising. This equates to 269,699 meals.
-- Ongoing partnership with World Land Trust
-- In September 2021, we began a long-term partnership and set
up a charitable fund with Somerset Community Foundation to help
people in Somerset through funding local charities, groups and
communities, inspiring giving and philanthropy
-- We continue to manufacture over half of our bags in the UK,
and invest in our thriving apprenticeship programme and Next
Generation retail concept.
Link to theme 5
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, including the
current and future anticipated impact of COVID-19. The going
concern period reviews the 12-month period from the date of this
announcement to 29 June 2023.
Whilst the Directors have not identified a material uncertainty
in respect of going concern, there was significant judgements
applied in reaching this conclusion. The key judgements in relation
to the going concern assessment are in respect to the more
challenging trading environment due to macroeconomic uncertainty,
along with ongoing disruption in key markets, as demonstrated with
the recent lockdowns in China. When making these judgements, the
Directors considered the outlook for the Group against their
detailed base case scenario. The Directors have also considered a
reverse stress test scenario and compared this to a reasonable
worse case downside scenario. These are described in further detail
below.
The Group had net cash of GBP25.7m (2021: GBP11.8 m) and
deferred liabilities of GBPnil (2021: GBP4.7m) at 2 April 2022 and
had not drawn down on its revolving credit facility.
Borrowing facilities
The Group has a GBP15m revolving credit facility with security
granted in favour of HSBC banking, which on 27 June 2022 was
extended for a further 12-month period to March 2024. Covenants are
tested on a quarterly basis and contain a net debt to EBITDA ratio
and a fixed charge cover ratio. Covenants are tested on a 'frozen
GAAP' basis and exclude the impact of IFRS 16. In addition, the
Group has a GBP4.0m overdraft facility and a further USD1.9m
overdraft facility in China which is currently capped at USD0.5m,
which are not committed facilities and therefore not considered by
the Directors as part of the going concern assessment. The group
overdraft is renewed annually and the overdraft in China is renewed
annually in July.
The revolving credit facility was not drawn down at the period
end and remains undrawn at the date of this report. The Group had
net cash of GBP16.6m at 24 June 2022.
Base case scenario
The Directors' base case scenario assumes that revenue will
increase by 10% versus 2021/22 driven primarily by growth in the UK
and APAC. The budget for 2022/23 has been built to continue to
leverage on the strong UK recovery seen throughout 2021/22. Further
opportunities present themselves in Asia as a result of increasing
brand awareness and established local teams. There has been some
caution in revenue for other macro circumstances, particularly in
Europe.
The budget includes cost increases relating to inflationary cost
pressure and to support system transformation projects to drive
efficiencies and improve conversion, as well as investment behind
strategic growth initiatives. These have been phased in the second
half of the year to allow for some flexibility to respond to market
conditions. Consideration to increasing supply chain, freight and
utilities costs has also been given.
Under this scenario, banking covenants will be met and the
revolving credit facility remains undrawn although available to the
Group throughout the 12-month going concern period.
Reverse stress test and downside scenario
The Directors have reviewed a reverse stress test scenario that
models the decline in sales that the Group would be able to absorb
before triggering a breach of banking covenants. It should be noted
that the revolving credit facility is not forecast to be fully
drawn down under the reverse stress test. The Directors believe
that this scenario is remote, for the following reasons:
-- Trading is currently outperforming the reverse stress test
scenarios and is anticipated to continue, which will further
strengthen banking covenants;
-- Despite the fall in revenue in the scenario, the RCF would
not be fully drawn although available to the Group throughout the
going concern period;
-- If trading was to be challenging over the key trading
periods, there is time to react and take further action before the
covenant is breached in June 2023, including further discretionary
cost savings and an increase in mark-down sales to clear stock. We
retain a good working relationship with our bankers, HSBC and would
look for a relaxation of bank covenants; and
-- The reduction in turnover could be recovered through other initiatives.
The reverse stress test assumes a 15% reduction in revenue
against the base case scenario, offset by a 10% reduction in
variable costs (marketing, consumables, travel and other goods not
for resale). Inventory production and purchases have not been
reduced in line with the anticipated demand under this
scenario.
Under this scenario, the revolving credit facility is not fully
drawn so would still be available to the Group throughout the
12-month going concern period, however, the leverage covenant would
be breached in June 2023. Whilst the Directors believe that this
scenario is remote, it would allow time for further actions to be
taken, including a possible further relaxation of banking
covenants. Whilst there is no guarantee that this will be agreed,
the Group currently maintains a good relationship with our bankers,
HSBC.
The Directors have considered a plausible but remote downside
scenario where the current downward trend in global revenue versus
the budget continues, the deployment of the new digital platform is
delayed and revenues in China do not recover to the budgeted levels
following the lockdown which ended in June 2022. No further
lockdown is assumed in Asia, as early containment measures have
proved effective in curbing the pandemic. The impact of this would
result in a 6% reduction in Group revenue against the base case
scenario.
Going concern basis
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 Annual Report
and financial statements.
Group income statement
53 weeks ended 2 April 2022
53 weeks 52 weeks
ended ended
2 April 27 March
2022 2021
GBP'000 GBP'000
Revenue 152,411 114,951
Cost of sales (43,106) (41,879)
-------- ---------
Gross profit 109,305 73,072
Other operating expenses (85,878) (70,300)
Other operating income 1,220 6,006
-------- ---------
Operating profit 24,647 8,778
Share of results of associates 127 (60)
Finance income 19 12
Finance expense (3,467) (4,176)
-------- ---------
Profit before tax 21,326 4,554
Tax (2,157) 43
-------- ---------
Profit for the period 19,169 4,597
-------- ---------
Attributable to:
Equity holders of the parent 19,985 4,773
Non-controlling interests (816) (176)
-------- ---------
Profit for the period 19,169 4,597
-------- ---------
Basic profit per share 32.2p 7.7p
Diluted profit per share 32.2p 7.7p
All activities arise from continuing operations.
Group statement of comprehensive income
53 weeks ended 2 April 2022
53 weeks 52 weeks
ended ended
2 April 27 March
2022 2021
GBP'000 GBP'000
Profit for the period 19,169 4,597
Items that may be reclassified subsequently to
profit or loss
Exchange differences on translation of foreign
operations (116) (49)
Total comprehensive income for the period 19,053 4,548
-------- ---------
Attributable to:
Equity holders of the parent 19,954 4,294
Non-controlling interests (901) 254
-------- ---------
Total comprehensive income for the period 19,053 4,548
-------- ---------
Group balance sheet
As at 2 April 2022
2 April 27 March
2022 2021
GBP'000 GBP'000
Non-current assets
Intangible assets 6,056 14,965
Property, plant and equipment 14,618 13,608
Right of use assets 32,221 33,511
Interests in associates 335 134
Deferred tax asset 2,148 1,234
-------- -----------------
55,378 63,452
-------- -----------------
Current assets
Inventories 36,783 31,476
Trade and other receivables 15,927 12,609
Current tax asset - 525
Cash and cash equivalents 25,669 11,820
-------- -----------------
78,379 56,430
-------- -----------------
Total assets 133,757 119,882
-------- -----------------
Current liabilities
Trade and other payables (24,975) (22,629)
Current tax liability (2,382) -
Lease liabilities (11,108) (14,820)
Borrowings (3,278) -
-------- -----------------
(41,743) (37,449)
-------- -----------------
Net current assets 36,636 18,981
-------- -----------------
Non-current liabilities
Lease liabilities (52,547) (59,054)
Borrowings (1,721) (4,673)
-------- -----------------
(54,268) (63,727)
Total liabilities (96,011) (101,176)
-------- -----------------
Net assets 37,746 18,706
-------- -----------------
Equity
Share capital 3,004 3,004
Share premium account 12,160 12,160
Own share reserve (1,269) (1,277)
Capital redemption reserve 154 154
Foreign exchange reserve 1,158 1,274
Retained earnings 27,006 6,957
Equity attributable to holders of the parent 42,213 22,272
Non-controlling interests (4,467) (3,566)
-------- -----------------
Total equity 37,746 18,706
-------- -----------------
The financial statements of Mulberry Group plc (company number
01180514) were approved by the Board of Directors and authorised
for issue on 28 June 2022.
They were signed on its behalf by:
Thierry Andretta Charles Anderson
Director Director
Group statement of changes in equity
53 weeks ended 2 April 2022
Share Own Capital Foreign
Share premium share redemption exchange Retained Non-controlling Total
capital account reserve reserve reserve earnings Total interests equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at
29 March 2020 3,004 12,160 (1,061) 154 1,323 1,761 17,341 (3,820) 13,521
------------ ------------ ----------- ------------ ----------- ------------ ------- --------------- -------
Profit/(loss)
for the period - - - - - 4,773 4,773 (176) 4,597
Other
comprehensive
expense for
the period - - - - (49) - (49) - (49)
Total
comprehensive
(expense)/income
for the period - - - - (49) 4,773 4,724 (176) 4,548
Charge for
employee
share-based
payments (note
30) - - - - - 105 105 - 105
Own shares - - 101 - - 5 106 - 106
Exercise of
share options - - - - - (4) (4) - (4)
Release of
impairment
of shares
in trust - - (317) - - 317 - - -
Non-controlling
interest foreign
exchange - - - - - - - 430 430
Balance 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 - - - - - 19,985 19,985 (816) 19,169
Other
comprehensive
expense for
the period - - -- - (116) - (116) - (116)
Total
comprehensive
(expense)/income
for the period - - -- - (116) 19,985 19,869 (816) 19,053
Charge for
employee
share-based
payments (note
30) - - - - - 69 69 - 69
Own shares - - 8 - - - 8 - 8
Exercise of
share options - - - - - (5) (5) - (5)
Non-controlling
interest foreign
exchange - - - - - - - (85) (85)
Balance at
2 April 2022 3,004 12,160 (1,269) 154 1,158 27,006 42,213 (4,467) 37,746
------------ ------------ ----------- ------------ ----------- ------------ ------- --------------- -------
Group cash flow statement
53 weeks ended 2 April 2022
53 weeks 52 weeks
ended ended
2 April 27 March
2022 2021
GBP'000 GBP'000
Operating profit for the period 24,647 8,778
Adjustments for:
Depreciation and impairment of property, plant
and equipment 3,702 4,777
Depreciation and impairment of right of use
assets 6,682 13,245
Amortisation of intangible assets 1,778 1,476
Gain on lease modification, lease disposals
and Covid 19 rent concessions (2,160) (10,314)
Loss on sale of property, plant and equipment 38 188
Profit on disposal of intangible assets (5,343) -
Own shares transferred from trust 8 106
Share-based payments expense 69 105
-------- ---------
Operating cash inflows
before movements in working capital 29,421 18,361
(Increase)/decrease in inventories (5,400) 3,420
Increase in receivables (3,318) (1,534)
Increase in payables 2,136 75
-------- ---------
Cash generated from operations 22,839 20,322
Income taxes (paid)/received (154) 201
Interest paid (3,470) (3,960)
-------- ---------
Net cash inflow from operating activities 19,215 16,563
-------- ---------
Investing activities:
Interest received and gains on foreign exchange
contracts 19 12
Purchases of property, plant and equipment (4,419) (1,895)
Proceeds from disposal of property, plant
and equipment 59 26
Acquisition of intangible assets (897) (2,233)
Proceeds from disposal of intangible assets 13,316 -
Net cash used in investing activities 8,078 (4,090)
-------- ---------
Financing activities:
Increase in loans from non-controlling interests 313 167
Repayment of borrowings - (750)
Principle elements of lease payments (13,736) (7,735)
Settlement of share awards (5) (4)
-------- ---------
Net cash used in financing activities (13,428) (8,322)
-------- ---------
Net increase in cash and cash equivalents 13,865 4,151
-------- ---------
Cash and cash equivalents at beginning of
period 11,820 7,998
Effect of foreign exchange rate changes (16) (329)
-------- ---------
Cash and cash equivalents at end of period 25,669 11,820
-------- ---------
Cash and cash equivalents comprise cash and short-term bank
deposits with an original maturity of three months or less. The
carrying amount of these assets at the end of the reporting period
as shown in the consolidated statement of cash flows can be
reconciled to the related items in the Consolidated balance sheet
position as shown above. Cash and cash equivalents does not include
bank overdrafts that are not integral to the cash management of the
group.
1. General information
Mulberry Group plc, a Public Limited Company limited by shares
listed on AIM ("the Company"), is incorporated and domiciled in
England, United Kingdom. The Company acts as the holding company of
the Group. The Company's registration number is 01180514.
The financial information set out in this document does not
constitute the Group's statutory accounts for the 53 weeks ended 2
April 2022 or for the 52 weeks ended 27 March 2021. Statutory
accounts for the 52 weeks ended 27 March 2021 have been delivered
to the Registrar of Companies and those for the 55 weeks ended 2
April 2022 have been approved and will be delivered to the
Registrar of Companies following the Company's General Meeting. The
auditors have reported on those accounts, their reports were
unqualified and did not draw attention to any matters by way of
emphasis without qualifying their reports and did not contain any
statement under section 498 (2) or (3) of the Companies Act
2006.
The financial statements and announcement for the period ended 2
April 2022 were approved and authorised for issue by the Board of
Directors on 28 June 2022.
2. Adoption of new and revised standards
New and amended standards adopted by the Group
In the current period, the Group has applied a number of
amendments to IFRS Standards issued by the International Accounting
Standards Board (IASB) that are mandatorily effective for an
accounting period that begins on or after 1 January 2021. Their
adoption has not had any material impact on the disclosures or on
the amounts reported in these financial statements.
The March 2021 IFRS Interpretation Committee (IFRIC) update
included an agenda decision on "Configuration and Customisation
costs in a Cloud Computing Arrangement" which was ratified by the
IASB in April 2021. Where the Group has implemented Software as a
Service (SaaS) solutions during the year, the IFRIC agenda decision
has been followed to determine the treatment of these costs.
At the date of approval of these financial statements, the Group
has not applied any new and revised IFRS Standards that have been
issued but are not yet effective.
The Directors do not expect that the adoption any Standards
which have been issued but not yet effective to have a material
impact on the financial statements of the Group in future
periods.
3. Significant accounting policies
Basis of accounting
The financial statements have been prepared in accordance with
UK-adopted International Accounting Standards in conformity with
the requirements of the Companies Act 2006.
For the period ended 2 April 2022, the financial period runs for
the 53 weeks to 2 April 2022 (2021: 52 weeks ended 27 March
2021).
The financial statements are prepared under the historical cost
basis except for financial instruments that are measured at fair
values at the end of each reporting period as explained in the
accounting policies below. The principal accounting policies
adopted are set out below.
Going concern
The Directors have, at the time of approving the financial
statements, a reasonable expectation that the Company and the Group
have adequate resources to continue in operational existence for
the foreseeable future. As a result, they continue to adopt the
going concern basis of accounting in preparing the financial
statements.
4. 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
For the financial years to March 2020 and March 2021, the Group
changed its segmental reporting to show a consolidated view of the
Group's performance as one operating (and reporting) segment,
reflecting the level of information the CODM considered the most
appropriate to monitor business performance and allocate resources
to support the growth of the Mulberry brand as a whole.
In the past financial year, the Group has extended its
omni-channel network in order to support the Group's global growth
ambitions. Mulberry has thus become increasingly reliant on
individual market-level profitability metrics to enable them to
make timely market-centric decisions that are operational and
investment in nature. For the period ending March 2022, it is
therefore appropriate to update the segmental analysis disclosures
away from a consolidated view of segments and move towards a more
regional view of segments (being UK, Asia Pacific and Other
International) to reflect the current business operations and the
way the business internally reports, and the information that the
CODM reviews and makes strategic decisions based on its financial
results. As a result of this change in approach the prior year
numbers have been restated.
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.
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
not attributable to the reportable segments.
Group income statement
53 weeks ended 2 April 2022
Asia Other
UK Pacific International Eliminations Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue
Omni Channel 163,727 27,551 11,849 (72,960) 130,167
Wholesale 3,968 3,862 14,414 22,244
Total revenue 167,695 31,413 26,263 (72,960) 152,411
------- -------- -------------- ------------ -------
Segment profit/(loss) 10,297 (232) 7,356 17,421
------- -------- -------------- -------
Central costs 469
Store closure credit 6,757
Operating profit 24,647
Share of results of associates 127
Finance income 19
Finance expense (3,467)
Profit before tax 21,326
-------
Asia
UK Pacific Other International Central Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Segment capital expenditure 2,216 2,321 1,000 71 5,608
Segment depreciation and
amortisation 8,639 954 565 2,004 12,162
Segment assets 89,026 20,707 11,701 10,175 131,609
Segment liabilities 61,660 8,221 13,597 12,511 95,989
Group income statement
52 weeks ended 27 March 2021
Asia Other
UK Pacific International Eliminations Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue
Omni Channel 124,993 21,309 7,579 (53,930) 99,951
Wholesale 2,564 2,803 9,633 15,000
Total revenue 127,557 24,112 17,212 (53,930) 114,951
------- -------- -------------- ------------ -------
Segment profit 2,958 1,306 6,172 10,436
------- -------- -------------- -------
Central costs (2,996)
Impairment charge relating
to property plant and equipment (590)
Impairment charge relating
to right of use assets (5,725)
Store closure credit 3,702
Lease modification 3,951
Operating profit 8,778
Share of results of associates (60)
Finance income 12
Finance expense (4,176)
Profit before tax 4,554
-------
Asia
UK Pacific Other International Central Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Segment capital expenditure 2,850 924 200 22 3.996
Segment depreciation and
amortisation 15,657 518 1,307 2,016 19,498
Segment assets 76,428 15,128 13,755 13,337 118,648
Segment liabilities 67,345 8,432 12,359 13,040 101,176
For the purposes of monitoring the segment performance and
allocating resources the Chief Operating Decision Maker, which is
deemed to be the Board, monitors the tangible, intangible and
financial assets. All assets are allocated to the reportable
segment.
(b) 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.
5. Alternative performance measures
A reconciliation of reported profit before tax to underlying
profit before tax is set out below;
53 weeks 52 weeks
ended ended
2 April 27 March
Reconciliation to underlying profit before 2022 2021
tax: GBP'000 GBP'000
Profit before tax 21,326 4,554
Restructuring costs - 2,370
Store closure credit (6,757) (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
Underlying profit before tax - non-GAAP measure 14,569 5,886
Adjusted basic earnings per share 24.8p 10.5p
Adjusted diluted earnings per share 24.8p 10.5p
In reporting financial information, the Group presents
Alternative Performance Measures ("APMs"), which are not defined or
specified under the requirements of IFRS. The Group believes that
these APMs, which are not considered to be a substitute for, or
superior to, IFRS measures, provide stakeholders with additional
helpful information on the performance of the business. These APMs
are consistent with how the business performance is planned and
reported within the internal management reporting to the Board of
Directors. Some of these measures are also used for the purpose of
setting remuneration targets. 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.
Restructuring costs
During the period, one-off charges of GBPnil (2021:
GBP2,370,000) were incurred relating to people restructuring
costs.
Store closure costs
During the period, two UK and two international stores were
closed (2021: two international stores) which had not been trading
in line with expectations. The stores closure credit relates to the
release to the Income Statement of lease liabilities of
GBP1,323,000 (2021: GBP4,261,000), a profit on disposal of an
intangible asset GBP5,343,000 (2021: GBPnil) and a credit for the
release of lease, exit and redundancy costs GBP91,000 (2021: charge
of GBP559,000). The disposal of the lease resulted in net cash
proceeds of GBP13,300,000. The right-of-use and tangible assets for
these stores had been fully impaired in previous periods.
Impairment charge related to property, plant and equipment and
right-of-use assets
The fixed assets and right-of-use assets of retail stores are
subject to impairment based on whether current or future events and
conditions suggest that their recoverable amount may be less than
their carrying value. The recoverable amount of each store is based
on the higher of the value in use and fair value less costs to
dispose. Value in use is calculated from expected future cash flows
using suitable discount rates, management assumptions and estimates
on future performance. The carrying value for each store is
considered net of the carrying value of any cash contribution
received in relation to that store. For impairment testing
purposes, the Group has determined that each store is a separate
cash-generating unit (CGU). Each CGU is tested for impairment if
any indicators of impairment have been identified. The value-in-use
of each CGU is calculated based on the Group's latest budget and
forecast cash flows. Cash flows are discounted using the weighted
average cost of capital ("WACC") and are modelled for each store
through to their lease expiry or break date. No lease extensions
have been assumed when forecasting. As a result of this assessment
impairment charges of GBPnil (2021: GBP590,000) and GBPnil (2021:
GBP5,725,000) were recognised in the period against the property,
plant and equipment and right-of-use assets respectively for the
stores which are impaired.
Lease modification
During the period to 27 March 21 the Group renegotiated a lease
that had 14 years remaining to one where only 9 years remain as at
27 March 2021. The resulting reduction in the lease liability was
treated as an IFRS 16 lease modification and resulted in a credit
of GBP3,951,000 to the Income Statement. There were no similar
modifications in the period to 2 April 22.
Licence agreement exit costs
During the period the Group incurred charges of GBPnil (2021:
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.
6. Other operating expenses
53 weeks 52 weeks
ended ended
2 April 27 March
2022 2021
GBP'000 GBP'000
Other operating expenses have been arrived
at after charging/(crediting):
Net foreign exchange (gain)/loss (57) 388
Amortisation of intangible assets 1,778 1,476
Depreciation of property, plant and equipment 3,702 4,187
Depreciation of right of use assets 6,682 7,520
Impairment of property, plant and equipment - 590
Impairment of right of use assets - 5,725
Store closure credit (6,757) (3,702)
Lease modification - (3,951)
Staff costs 40,731 36,330
Restructuring costs - 2,370
Loss on disposal of property, plant and equipment
and right of use assets 38 188
Other operating expenses 39,761 19,179
-------- ---------
85,878 70,300
7. Earnings per share ('EPS')
53 weeks 52 weeks
ended ended
2 April 27 March
2022 2021
pence pence
Basic earnings per share 32.2 7.7
Diluted earnings per share 32.2 7.7
Underlying basic earnings per share 24.8 10.5
Underlying diluted earnings per share 24.8 10.5
Earnings per share is calculated based on the following
data:
53 weeks 53 weeks
ended ended
2 April 27 March
2022 2021
GBP'000 GBP'000
Profit for the period for basic and diluted earnings
per share 19,169 4,597
Adjusting items:
Restructuring costs* - 1,931
Store closure credit* (4,411) (3,611)
Impairment relating to retail assets - 590
Impairment charge related to right of use assets - 5,725
Lease modification* - (3,200)
Licence agreement exit costs* - 243
Profit/(loss) for the period for underlying
basic and diluted earnings per share 14,758 6,275
-------- ---------
*These items are included net of GBP2,346,000 (2021: GBP346,000)
of the corresponding tax expense.
53 weeks 52 weeks
ended ended
2 April 27 March
2022 2021
Million Million
Weighted average number of ordinary shares for
the purpose of basic EPS 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
-------- ---------
The weighted average number of ordinary shares in issue during
the period excludes those held by the Mulberry Group plc Employee
Share Trust.
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END
FR UWRURUAUNUUR
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