LONDON — Boardroom battles helped to widen Mulberry’s net loss in fiscal 2003, and the firm’s now hoping a secondary stock offering will help it cut into its debt.
This story first appeared in the August 8, 2003 issue of WWD. Subscribe Today.
The new stock could give Ong Beng Seng and Christina Ong a majority stake in the firm.
In the fiscal year ended March 31, the U.K. apparel and accessories company posted a net loss of $3.5 million, compared with a loss of $2.9 million during the previous fiscal year. Dollar figures have been converted from the pound at current exchange, as Mulberry reported a net loss of 2.2 million pounds versus a year-ago loss of 1.8 million pounds.
One-time costs, as well as higher sales expenses, were the culprits.
“This year, the one-off costs were mainly associated with the resignation of Roger Saul as chairman and chief executive after an extended shareholder dispute, the costs of that dispute and further management changes concluded in the year,” said Godfrey Davis, Mulberry’s new chairman and chief executive, in a statement this week.
Exceptional costs related to the boardroom battle amounted to $1.4 million, or 874,000 pounds.
As reported, the Ongs, who have a 41.5 percent stake in Mulberry through a company called Challice, attempted to oust Saul last November because of what they saw as his continued disappointing performance. Saul, in turn, accused the Ongs of trying to wrest control of the publicly traded company without making a fair bid to shareholders. In the end, Saul, who owns about 38 percent of the firm, resigned and took the title of president and non-executive director.
Davis pointed out that Mulberry had managed to burn through all of the money it raised when it went public in September 2000, spending over $4.8 million in the last two years “on renewing the brand presentation, including refurbishing the Bond Street flagship. This expenditure, combined with the losses of 4 million pounds ($6.4 million) in the same period, has consumed all of the money raised from the share placing,” he said.
In a bid to bring money into the Mulberry coffers, the company this week announced a stock offering, underwritten by the Ongs, aimed at raising $5.6 million, or 3.5 million pounds.
The proposed offer of 12.6 million new shares at 45 cents, or 28 pence, per share has been made on the basis of two new shares for every seven existing shares.
The Ongs would be able to increase their holdings to a maximum of 56.6 percent if they purchased all new shares, and they are expected to purchase at least 75 percent of them.
Meanwhile, sales for the year increased 1.3 percent to $45.1 million from $44.5 million. However, the cost of sales increased 11.7 percent to $24.8 million from $22.2 million.
The company said the accessories division, which accounts for some 70 percent of the business, was hit by a wobbly economy in Scandinavia and much of the rest of Europe, causing a reduction of 12 percent in the wholesale export business.
Mulberry’s retail business in the U.K. however, grew by 3 percent during the period. The company did not provide separate figures for these businesses.
Davis said retail sales in Mulberry’s U.K. stores in the first 13 weeks of the current fiscal year were 2 percent higher than last year. However, export orders for the core accessories business in Europe were reduced, reflecting continuing economic problems in the region.