LONDON — Mulberry’s fortunes are turning: The brand returned to profitability in the 2015-16 fiscal year and the brand is bucking the trend among big European luxury players, who are seeing their sales and profits shrink.
In the 12 months to March 31, the British leather accessories brand notched a gain of 2.7 million pounds, or $4.1 million, versus a loss of 1.4 million pounds, or $2.3 million, in the previous year.
Revenue was 155.9 million pounds, or $235.4 million, with retail sales climbing 8 percent 118.7 million pounds, or $179.2 million.
The momentum is continuing: Retail sales in the first 11 weeks to June 11 were up 9 percent overall, and 4 percent on a like-for-like basis.
Mulberry shares remained flat during the day at 10.25 pounds, or $14.51.
Mulberry is emerging from its own dark age when profit warnings proliferated. A few years ago, the brand had raised its prices in a bid to move upmarket and compete with the big luxury players. In the process, it lost its core British customer base and became a loss-maker.
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The company had already moved back into the black in the first half, notching a 4.8 percent increase in revenue growth and seeing strong demand for its products in the U.K. Profit for the six months to Sept. 30 was 120,000 pounds, or $185,000.
All figures have been converted at average exchange rates for the periods to which they refer.
In a report following the preliminary results announcement Thursday, Barclays called the latest figures “notably robust in a very tough luxury market,” and “impressive” considering the fact that the part of creative director Johnny Coca’s first collection will only land in stores by the end of June.
Mulberry joins fellow British brand Jimmy Choo in going against the luxury grain.
Earlier this week before its annual general meeting, Choo released a statement saying the company had made a good start to the year and that trading was in line with our expectations.
“Despite the headwinds facing the majority of the sector in 2016,” the strategy continues to deliver, with growth on track including in Asia, Choo said.
Fast-changing tourist patterns from currency fluctuations and terrorist attacks in Europe have left luxury companies counting their losses and, in the case of Burberry, crafting austerity plans to cope with the hard times.
Mulberry added Thursday it remains committed to its core price bracket of 500 to 995 pounds, or $780 to $1,410, for bags. It said the style and price point of its new shoes and ready-to-wear collections have been aligned with bags in order to make the collections more relevant to the core customer.
Earlier this year, Mulberry inked a deal with Onward Luxury Group for the manufacture and co-distribution of shoes and rtw, starting with the fall season. Leather goods account for 90 percent of Mulberry’s sales.
Another key Mulberry strategy is to shorten the time between showing collections and making them available to customers.
Mulberry began testing the waters earlier this year, delivering the first pieces of its fall collection at the end of March, a few weeks after its London show. The fall line will be fully delivered by the end of August.
Chief executive officer Thierry Andretta said Mulberry’s British manufacturing base, which produces about 50 percent of its bags, “has remained a core strength and point of distinction.” It also allows Mulberry to control costs and supply chain, and get products to market more quickly.
Andretta added the brand has over the past year invested in product design and development as well as omnichannel.
Sales in the digital business were up nearly 20 percent last year and Andretta told WWD that omnichannel is the way forward. The brand is increasingly seeing its stores as supply hubs, where customers can pick up and return online purchases.
He said Mulberry’s omnichannel offer has extended to France, Germany the Netherlands and will launch this summer in the U.S.
Andretta added that the evolution of omnichannel also means that Mulberry will be re-evaluating the location, size and nature of its brick-and-mortar stores and outlets.
One option, he said, is to transform the Mulberry concessions at House of Fraser — which sell only leather goods — into a click-and-collect hub for shoes and rtw.
He also said social media has become a priority for the brand, with 45 million people having viewed the February runway show online so far.
“This means that we really need to improve time to market because digital people don’t like to wait for months. This is a big issue. We need to continue working and investing in this,” he said.
Barclays added that the results look on track, with management confidence highlighted by a 5 pence, or 7 cents dividend. The bank also pointed out that Mulberry’s balance sheet remains strong with 14 million pounds, or $20 million in net cash.