LONDON — Mulberry has revised its guidance for the second half of the year, saying Tuesday that it is set to make a “small loss” in the second half due to the impact of store closures from the coronavirus.
In November, the company said it was expected to be profitable and cash-generative in the second half, which ends on March 28. Mulberry added that given the rapidly evolving nature of the situation, “it is not possible to provide meaningful guidance on the company’s future performance.”
Mulberry said it is working to protect cash and to secure future value for its stakeholders by “proactively managing its capital,” as well as identifying opportunities for cost savings.
Mulberry is one of very few British brands to make its products in the U.K. It has two factories in Somerset that make roughly half of the brand’s accessories, and carry out repairs. It closed its U.K. stores on March 21, and said it was following U.K. government guidelines with regard to other operations. In addition, the company said it is reviewing its international portfolio of stores on a case-by-case basis.
The British government has asked everyone to work from home, if possible, with only “key workers,” such as doctors, nurses, supermarket staff and public employees permitted to go to work if they observe social distancing rules.
It has not yet forced factories to close. Under a new, multibillion pounds scheme announced by the British Chancellor Rishi Sunak last week, employers are able to apply to the state for loans covering 80 percent of wages of staff that they promise to keep on payroll, even if those people are self-isolating or cannot work due to closures.
Mulberry said the welfare of its staff and customers is the board’s main priority, and it has been taking “all appropriate action” to mitigate the impact of COVID-19 in line with government advice. As reported, Mulberry is also in the process of seeking a successor to Johnny Coca, who has left his role as creative director of the company. Coca’s last collection for the brand will be for spring 2021.
Mulberry stressed that it has a “robust balance sheet,” with net cash of 8.8 million pounds as of March 20. The company added that it has additional liquidity through its 19 million pounds of bank facilities and maintains “a positive dialogue” with its lenders with regard to optimizing its operational flexibility and banking covenants.
The company also pointed out that it has a supportive majority shareholder, and welcomed the measures announced by the government to support U.K. businesses. The shareholder is Christina Ong, who took control of the company in 2003. Mulberry is also quoted on the AIM division of the London Stock Exchange.
The board of Mulberry said it has carefully considered the potential impact of COVID-19 on the company’s trading performance, including running various scenarios as to the possible impact on sales, profits and cash flows. Given the current circumstances, the board has decided to suspend all shareholder distributions until further notice.
“Our highest priority at this time is the health and safety of our colleagues, customers, and all other stakeholders,” said Thierry Andretta, Mulberry’s chief executive officer. “Whilst it is uncertain how long the virus will directly impact our markets and our businesses, we remain confident in the strength of our brand, and in our strategy over the long term.”