Luxury handbag maker Mulberry's (MUL) growth profile is stalling. Half-year like-for-like retail sales did rise 7 per cent year on year, and by 11 per cent in the nine weeks to 1 December. But that's weak compared with last year's performance - in the year to the end of September 2011, like-for-like retail sales surged 44 per cent.
A big problem is that around 80 per cent of retail sales are generated in the economically challenged UK. So management is looking overseas and eight international stores were opened during the first half, with 17-20 new stores planned by March 2013. Expect 15-20 new stores a year are in key cities across Europe, the US and Asia. That's pushing up costs - capital expenditure reached £8.3m and should rise to £20m for the full year. But with international sales having risen 40 per cent to £7.3m, it's a price that's probably worth paying. The wholesale operation is also under pressure - revenue fell 4 per cent and is expected to slide 10 per cent for the full year. Worryingly, that's partly down to tougher conditions in Asia - formerly a key growth market for luxury goods makers.
The gross margin slipped 4.9 percentage points, too, to 61.3 per cent - although that's expected to partly recover in the second half. WH Ireland expects full-year adjusted pre-tax profit of £29m, giving EPS of 36.9p (from £36m and 43.9p in 2012).
| MULBERRY (MUL) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,151p | MARKET VALUE: | £687m | |
| TOUCH: | 1,151-1,170p | 12-MONTH HIGH: | 2,500p | LOW: 925p |
| DIVIDEND YIELD: | 0.4% | PE RATIO: | 31 | |
| NET ASSET VALUE: | 112p | NET CASH: | £12.6m | |
| Half-year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 72.3 | 15.6 | 19.6 | nil |
| 2012 | 76.5 | 10.0 | 12.9 | nil |
| % change | +6 | -36 | -34 | - |
