To no one's surprise, Mulberry (MUL) reported a £1.2m operating loss at the half-year mark. The handbag maker has delivered a succession of profit warnings this year as its efforts to move upmarket have floundered, following a slowdown in orders from Asian and European franchise partners.
The underlying source of the group's woes seems to be the determination of former chief executive Bruno Guillon to transform Mulberry into a top-tier luxury brand. Guillon's plans alienated existing Mulberry customers, many of whom were unwilling to pay in excess of £1,000 for the group's new lines. The strategy prompted the resignation of Mulberry's creative director, while costs escalated due to the roll-out of expensive new retail outlets. With margins in retreat, Mr Guillon stepped down in March and the strategy was abandoned.
The good news is that trading in the weeks after the period-end has been encouraging, with retail sales up 8 per cent, against a fall of 9 per cent in the six months to 30 September. The reversion to more realistically priced products - most notably the Tessie and Cara Delevingne handbag ranges - has played well with cash-conscious consumers. The group is also confident that the recent appointment of Johnny Coca as creative director will add impetus to the recovery - although he won't be leaving French fashion house Celine until next July.
Barclays anticipates 2015 EPS of 2p.
| MULBERRY (MUL) | ||||
|---|---|---|---|---|
| ORD PRICE: | 780p | MARKET VALUE: | £468m | |
| TOUCH: | 749-780p | 12-MONTH HIGH: | 1,055p | LOW: 563p |
| DIVIDEND YIELD: | 0.6% | PE RATIO: | 153 | |
| NET ASSET VALUE: | 134p* | NET CASH: | £3.6m | |
| Half-year to 30 Sept | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2013 | 78.1 | 7.2 | 8.7 | nil |
| 2014 | 64.7 | -1.1 | -0.7 | nil |
| % change | -17 | - | - | - |
Ex-div:- Payment:- | ||||
