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Mulberry is busy building its brand, targeting high spenders in the US, the Middle East and Asia in particular. This doesn't come cheap and the £1.6m spent on new store openings, and £0.8m on marketing, have hit first-half profits.
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And the pace continues - in the next six months Mulberry plans to open eight new shops, one of which will be in the new Terminal 5 at Heathrow. The majority, however, will be in the Middle and Far East, plus four department store concessions, two of which are in Korea. Meanwhile, retailers at this end of the luxury goods market seem fairly well insulated against shifts in consumer spending - Mulberry's sales in the UK in the nine weeks to 1 December are up by over a third, or 9 per cent on a like-for-like basis.
Given the seasonal pattern of retail spending and new outlets coming on stream, profits will be weighted to the second half, so house broker Landsbanki expects adjusted full-year pre-tax profits to slip from last year's £6.7m to £5m, with EPS down from 7.4p to 6.1p.
MULBERRY (MUL) |
||||
|---|---|---|---|---|
| ORD PRICE: | 197p | MARKET VALUE: | £113m | |
| TOUCH: | 194-200p | 12-MONTH HIGH: | 283p | LOW: 182p |
| DIVIDEND YIELD: | 0.8% | PE RATIO: | 30 | |
| NET ASSET VALUE: | 34p | NET CASH: | £6.4m | |
| Half-year to 30 Sep |
Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2006 | 20.7 | 2.22 | 3.00 | Nil |
| 2007 | 21.5 | 1.25 | 1.40 | Nil |
| % change | +4 | -44 | -53 | - |
Mulberry is relatively well insulated against consumer weakness. But, shorter-term, that's what is likely to drive sentiment towards retailers generally and, on a forward PE of 32, the group's strengths look well factored-in. Fairly priced.
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-IC-1.5.4a-prod - 31/10/2008 13:11:34 - carlos.princz
