LONDON — Revenue rose and losses widened in the first half at Mulberry, which has made a series of tech, retail and operational investments aimed at pumping up future performance in challenging times.
Revenue in the six months to Sept. 30 climbed 7 percent to 69.7 million pounds at reported exchange. At constant rates, revenue rose 8 percent.
Pre-tax losses widened to 12.8 million pounds from 3.8 million pounds due to a series of investments.
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Mulberry said it put 3.3 million pounds toward a software licensing and delivery service; incurred operating costs from its new stores in Sweden and Australia, and made “important investments” for future growth.
Chief executive officer Thierry Andretta said that despite a difficult macro environment and a decline in consumer demand, Mulberry continued to see top-line growth and was confident about trading in the second half, and in the longer-term.
“Our strategy to transform our international businesses to a direct-to-consumer model has enabled us to control the entire customer experience in Sweden, Australia, New Zealand and Japan. Our investments in the period in our digital systems, stores and products will power future growth,” Andretta said.
He added that recent product launches had been well-received by customers. “Looking ahead, we are well placed to capitalize on the important festive trading period,” with increased sales expected in the second half, he said.
In a research note, Barclays said sales were in line with expectations and noted the brand was “not immune to the slowdown” in luxury consumption.
In the first half, Mulberry’s U.K. retail sales rose 6 percent to 36.2 million pounds, despite being impacted by the broader economic environment and weak consumer sentiment.
International retail sales increased 34 percent at actual rates, and 35 percent at constant exchange to 23.5 million pounds. Mulberry said the gains were the result of a decision to take back control of stores, including those in Sweden and Australia.
In the U.S., revenue increased by 38 percent at actual exchange and 42 percent at constant rates due to “increased brand awareness.”
Asia Pacific retail sales increased by 13 percent at actual exchange, and 18 percent at constant rates, to 13.5 million pounds.
The company said that underlying retail sales in Asia Pacific decreased by 7 percent at actual exchange, and 3 percent at constant rates, due to “the challenging China macro-economic climate and reduced footfall across the region.”
Like so many fashion and luxury leaders, Andretta also emphasized that the macro-economic environment had deteriorated over the past six months, “and this has had a knock-on effect on consumer sentiment. We have ensured that we are prepared to navigate this tricky environment and we are confident in our ability to continue to execute our strategy.”
He also repeated his call for the U.K. government to restore tax-free shopping for international tourists.
Andretta and fellow CEOs of British fashion and luxury companies argue that the repeal of tax perks post-Brexit has forced customers to shop in luxury retail hot spots such as Milan and Paris instead of London.
The government has so far turned a deaf ear to their requests, preferring to collect the full tax receipts instead.
“I continue to believe that offering VAT-free shopping in the U.K. would be one of the most effective ways to encourage business growth in this country,” Andretta said.
“The fact this has not been reinstated is creating challenges for all sectors; impacting not only the luxury players, but also hospitality, travel and tourism. As we look ahead to the new year, I urge policy makers to collaborate with all industries campaigning on this issue and reconsider implementing this to support businesses across the U.K.,” he added.