Mulberry losses widen amid investments

Luxury handbag maker Mulberry reported a widening of its half-year losses on Thursday as it pointed to additional investments and costs to support business growth.

In the 26 weeks to 30 September, the underlying pre-tax loss widened to £12.3m from £2.8m in the same period a year earlier, while the reported pre-tax loss widened to £12.8m from £3.8m.

Mulberry said the underlying loss included £3.3m of Software as a Service (SaaS) costs, the additional operational costs of its new stores in Sweden and Australia, and "additional important investments for future growth in the group".

Group revenue rose 7% to £69.7m. Retail sales in the UK were up 6% to £36.2m, impacted by "the broader economic environment", while international retail sales were 34% higher at £23.5m. Revenue in the US was ahead 38% due to increased brand awareness and retail sales in Asia Pacific were up 13% at £13.5m.

However, underlying retail sales in Asia Pacific fell 7%, with Mulberry citing the challenging macroeconomic climate in China and reduced footfall across the region.

Chief executive Thierry Andretta said there was no doubt the macroeconomic environment has deteriorated, and this has had a knock-on effect on consumer sentiment.

"At Mulberry 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. I continue to believe that offering VAT-free shopping in the UK would be one of the most effective ways to encourage business growth in this country.

"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 UK."

At 0825 GMT, the shares were down 15% at 140p.