LONDON — Profits at Mulberry Group plc slid 2.5 percent to 2.6 million pounds, or $4.5 million, from 3.4 million pounds, or $5.8 million, in the fiscal year ending March 31, due to a higher tax rate and costs linked to store openings, product development, marketing and management.
This story first appeared in the June 19, 2009 issue of WWD. Subscribe Today.
All figures have been calculated at average exchange rates for the period to which they refer.
The firm said Thursday that sales rose 14.5 percent to 58.6 million pounds, or $100.7 million, from 51.1 million pounds, or $87.9 million, due to strong first-half growth and a pickup in trading before Christmas that continued into the new year.
And sales are on the upswing: Mulberry said during the first 10 weeks of the current fiscal year, U.K. retail sales were up 26 percent due to a combination of tourist demand from the weaker pound and new products such as the Mitzy bag.
Chairman and chief executive officer Godfrey Davis said U.K. sales have been “very strong” and show no signs of slowing. In the U.S., he said sales are picking up, and the company is bullish about the medium-term. He added, however, that he was remaining cautious about the outlook, given the weak domestic economy and the uncertain global economic climate.
Mulberry’s wholesale customers have remained cautious in their buying, he said, and as a result wholesale orders are expected to drop 15 percent for fall, and 4 percent for spring 2010.
In order to exercise better control of its retail, wholesale and Internet businesses in the U.S., the company has terminated its joint venture with a division of the Challice Group, which is owned by the Ong family, Mulberry’s shareholders of reference. It also shuttered its Los Angeles store earlier this year.
Davis said the company plans to focus its efforts on its two New York units on Bleecker Street and Madison Avenue, and on its U.S. Web site, which launched last November. Overall, online sales grew by 38 percent year-on-year.
“The U.S. has the potential to be a very big market for our business in the future. This deal creates the opportunity for us to make the most of it,” Davis said.
Mulberry last year closed its units at the Pier Shops at Caesars in Atlantic City, N.J., and at the Americana Manhasset in Manhasset, N.Y., because they were no longer of strategic importance.
Mulberry has about 3.7 million pounds, or $6.4 million, in cash on its balance sheet. Davis said the extra cash allowed the company to keep its inventory levels steady during the second half when demand dropped, and to maintain high-margin sales in the run-up to Christmas. He added the money would also allow the group to pursue growth in the U.K., the U.S. and internationally.