LONDON — Mulberry, the U.K. accessories and fashion brand, posted a net loss of $1.6 million in the first half, due to a slowdown in tourism, a shop closure in Tokyo and increased off-price selling.
In the comparable period last year, the firm registered a $1.5 million loss.
The company said in a statement Thursday that sales in the period ending Sept. 30 had increased by 10 percent to $21 million from $19 million. Half of that increase came from off-price and discounted sales, and the other half from growth in its wholesale accessories business.
All figures are converted from the pound at current exchange rates.
In his first report as chairman and chief executive of Mulberry, Godfrey Davis described the trading climate in the U.K. and northern Europe as "tough and demanding." He also said Mulberry had completed a $1.3 million cost-reduction program, and would now focus on guiding the company back to profitability.
Gross margin fell to 44.1 percent from 54.2 percent a year ago, due, the company said, to the higher proportion of sales made through the off-price business, and to discounting in order to reduce stock. Stock was reduced $1.9 million compared with the corresponding period last year. The closure of Mulberry’s Tokyo store in June added $312,000 to the overall losses.
The outlook for the second half is mixed, Davis said. Sales in the first eight weeks to December 7 are 2 percent higher than last year. Early indications for spring 2003 are "satisfactory" for accessories — which generate 70 percent of group sales — and "disappointing" for clothing.
Davis added that costs linked to Mulberry’s shareholder dispute last month will amount to $1.4 million, and will weigh on the bottom line for the fiscal year ending March 31.
As reported, Davis succeeded Roger Saul last month after Ong Beng Seng and Christina Ong, who hold a 41.5 percent stake in Mulberry, threatened to oust Saul.
Mulberry has had a bumpy financial performance since it went public in September 2000, swinging from booming profits at the time into declining profits and ultimately losses as a result of the weakening economy and a continuing revamp of the brand.
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