Expansion into Asia has weighed on British luxury bag label Mulberry’s bottom line, but the company is confident the foray will bear fruit.
Mulberry reported a pre-tax loss of £5 million in the year to March 30, a sharp contrast to a £6.9 million pre-tax profit the previous year.
The other major contributor to the loss was the collapse of British department store House of Fraser which cost it £2.1 million and worsening the impact of a “challenging” UK domestic market. Sales fell 2 per cent to £166.3 million.
During the year, Mulberry opened new business subsidiaries in Japan and South Korea along with new stores in New York and Dubai as it focuses on international markets for sustained future growth. Revenue from overseas rose 7 per cent for the year, compensating in part for a 6 per cent drop in domestic sales. Online sales rose 27 per cent
“The group has delivered results in line with expectations and is making good progress in advancing its international strategy and direct to customer model whilst managing a challenging UK market,” said CEO Thierry Andretta.
“Looking ahead, we anticipate that international and digital sales will continue to grow whilst UK retail trading conditions are expected to remain uncertain. The group plans to invest further in its new Asian entities during this development phase, enhance its global digital platform and optimise the UK network,” he said.
Sales in the 11 weeks to June 15 were up 13 per cent.
Chloe Collins, senior retail analyst at GlobalData, said Mulberry needs to seek new and inspiring ways to attract new customers via increased social media and marketing campaigns.’
She said Mulberry’s expansion of its lifestyle-product offer – it launched its first eyewear range last year – and its plans to increase the depth in its range of trainers are a wise move to capitalise on the trend for athleisure and competing with the likes of Isabel Marant and Golden Goose.
“However, it must be careful that this does not distract design focus from its core handbags offer, where developments and upgrades are still necessary to maintain shopper appeal.”
She said teaming up with fast-growing technology platform Farfetch for a new digital concession in April, will help Mulberry increase its reach and bolster sales, both in the UK and internationally.