Handbag maker Mulberry 's (MUL) new venture in the Far East did a good job of overshadowing its move into the red on these numbers. The luxury group plans to team up with Challice - a company majority owned by Mulberry’s own majority shareholder Ong Beng Seng - to create Mulberry Asia, which will look after operations in China, Hong Kong and Taiwan. Mulberry plc will own 60 per cent of the new company, which will start with four stores, wholesale and omnichannel, including a Chinese language mulberry.com site. It is expected to be operating by next spring, although it will be loss-making for its first two years, with all financials consolidated into the main group’s accounts.
The new initiative comes at an interesting time for luxury retailers, which are largely dependent on Asian customers for a chunk of their sales. During the first six months UK retail sales - which remain the bulk of Mulberry's business - rose 12 per cent or 7 per cent on a like-for-like basis, while international sales rose 2 per cent or 10 per cent on an underlying basis. A higher level of investment to support new creative director Johnny Coca’s design vision had a negative impact on gross margins, as did the weakening of sterling. Foreign exchange rates should add around £1m to Mulberry’s cost base this year.
| MULBERRY (MUL) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,100p | MARKET VALUE: | £ 652m | |
| TOUCH: | 1,050-1,100p | 12-MONTH HIGH: | 1,158p | LOW: 881p |
| DIVIDEND YIELD: | 0.5% | PE RATIO: | 297 | |
| NET ASSET VALUE: | 137p | NET CASH: | £11m | |
| Half-year to 30 Sep | Turnover (£m) | Pre-tax profit (£'000) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2015 | 67.8 | 60 | 0.2 | nil |
| 2016 | 74.5 | -515 | -0.6 | nil |
| % change | +10 | - | - | - |
Ex-div:na Payment:na | ||||
