LONDON — Mulberry, the British accessories and ready-to-wear brand, said Thursday that net profits fell 13 percent to 3.4 million pounds, or $6.9 million, on a 13.5 percent increase in sales to 51.1 million pounds, or $102.7 million, in the year ended March 31.
In the previous year, profits were 3.9 million pounds, or $7.9 million, on sales of 45 million pounds, or $90.4 million. All dollar figures have been converted from the pound at average exchange rates for the period.
The company said the drop in net profits was a result of the costs associated with new store openings and increased marketing spending. Pretax profits for the year dropped 16 percent to 5.2 million pounds, or $10.3 million.
"These results reflect the continued investment in the brand," said Godfrey Davis, chairman and chief executive of Mulberry. "We continue to invest in the business both in the U.K. and internationally, using the retained profits and cash flow to invest in the opening of new shops and to significantly increase the expenditure on marketing. This strategy reduces profits in the short term...but is the key to developing future shareholder value."
During the past financial year, the brand increased its marketing spending by 2.1 million pounds, or $4.2 million, to 4.8 million pounds, or $9.4 million. Its retail space also increased, with eight Mulberry stores and six shop-in-shop units opening during the year.
Davis said accessories accounted for 90 percent of the brand's sales, with the label's Bayswater, Roxanne and Mabel leather handbags selling strongly, while a line of women's shoes will launch at Mulberry stores this fall. The brand also saw sales growth in its 42 stores and shops-in-shops in the U.K., with revenues rising 29 percent in those stores, and up 10 percent on a like-for-like basis.
The brand's sales growth continues — in the first 10 weeks of the current financial year, Mulberry said U.K. retail sales had risen 36 percent compared with the previous year. However, Davis sounded a cautious note on the outlook, in light of the tough economic climate. "Economic conditions are concerning and we remain cautious, particularly in light of cost inflation in the supply chain, which will put pressure on our margins," he said.In terms of future stores, the brand said it would open doors in Athens; Dubai; Jeddah, Saudi Arabia; Kuwait, and Copenhagen airport this year, along with stores in London and Leeds in the U.K.
Mulberry said the five U.S. stores it has opened with its associate company Mulberry USA LLC had incurred start-up losses, but described the brand's venture in the U.S. as a "long-term project." "We plan to build on the individual existing shops and profitability, and there is potential to open further shops, which will enable the U.S. business to reach critical mass," Davis said. To wit, the brand has plans to launch an e-commerce site in the U.S., which will trade in dollars, though no date has been set for the launch.
Davis said the stores the company has opened with its partner in Asia, Club 21, are developing "satisfactorily." In contrast, the company has terminated its arrangement with its partner in Japan to wholesale the collection in the region, saying that business there "has not met our requirements for growth and market penetration." Davis said the brand plans to "develop a new approach to this market in due course." Following the news, shares in Mulberry rose 9.09 percent to 162 pence, or $3.19 a share, on London's AIM market Thursday afternoon.
“Azzedine has been one of the biggest influences in my life. He has always been such a strong, loving, fatherly figure to me. I call him Papa. His designs are indescribably unique, they are pieces of art. He knew how to make the female form look its loveliest. I have so many memories of him; my favorite might be during my first show with him in Paris. He liked me and he wanted to help me get more work. He called all his friends at Kenzo and Comme des Garcons, and asked them to book me. They said, ‘But she can’t walk!’ And he said, ‘but she has such a great ass!' His friendship and support has been the great privilege of my career. I can't imagine life without him. Repose en paix mon Papa.” - @stephanieseymour tells @wwd. #wwdfashion (📷: @steveeichner) #alaia #azzedinealaia
Azzedine Alaïa, flanked by two of his closest friends, models Stephanie Seymour and Naomi Campbell.
He designed Seymour’s dress for her 1995 wedding to Peter Brant, and treated Campbell (who famously called him Papa), like a daughter. For more on the legendary designer, tap the link in bio. #wwdfashion #alaia #azzedinealaia
Azzedine Alaïa's “I-did-it-my-way” ethos stood out starkly at a time when brands are experimenting with consumer-facing fashion shows, coed formats and trans-seasonal collections – anything to perk up lackluster sales of ready-to-wear in an age of Insta-everything. “It’s not creation anymore. This becomes a purely industrial approach,” the late designer told WWD in an interview last year. “But anyway, the rhythm of collections is so stupid. It’s unsustainable. There are too many collections.” Read more about the iconic designer’s life and work on wwd.com, link in bio. #wwdfashion #azzedinealaia (📷: @WWD Archive, 1986) #alaia
Sneaker reselling app @goat’s latest exhibit, "The Greatest: New York," tells the story of New York's sneaker culture. To celebrate the exhibit, an intimate crowd gathered on Thursday night at the pop-up gallery space, located at Platform in Culver City, to hear guest speaker and illustrator @esymai talk about her own rise in streetwear and women in the business. "For me I'm just someone who is creative. I like to create things," said Chang. #wwdfashion
Azzedine Alaïa, one of the most iconic couturiers of the modern era whose body-con designs defined Eighties fashion, has died in Paris. The diminutive Tunisian-born designer, known for his structured knitted dresses with fitted waists and impeccably cut, figure-hugging second skin silhouettes was deeply admired by his peers, and counted supermodel Naomi Campbell - his adoptive daughter - among his inner circle, one of a gang of glamazons including Farida Khelfa, Carla Bruni and Stephanie Seymour who became ambassadors of his style. (📷: Alexandre Guirkinger) #wwdblast