Mulberry scraps divi, swings to FY loss; Sees improving trend

UK luxury goods maker Mulberry scrapped its dividend as it reported an annual loss, but said improving sales from post-coronavirus lockdowns would result in narrower losses in the current year.

The company said underlying pre-tax losses for the year to March 28 came in at £14.2m, compared with a £1m profit a year earlier.

Mulberry, which makes expensive leather handbags, said revenue fell to £149.3m from £166.3m and was down 29% in the 26-week period to September 26 - ahead of early expectations.

“However, we cannot escape the reality that British luxury and UK cities face a very uncertain future, hampered by necessary but dramatic social distancing measures and alarmingly low levels of footfall, as well as the pressures of high rents and business rates and the upcoming changes to tax free shopping,” said chief executive Thierry Andretta.

Statutory pre-tax losses were £47.9m, including asset impairments of £32.1m from the expected impact of the pandemic on future trading.

Mulberry said trading since the start of fiscal 2021 has been ahead of its expectations and expects losses to be reduced in the current financial period.

"The strength of our digital business has resulted in initial sales in the period to date being ahead of early expectations, with growth in Asia helping to offset some of the impact of the shut down in the UK, Europe and North America," the company said.

Mulberry said most of its UK and European stores had re-opened since the start of the new financial year with trading depressed in capital cities but stronger elsewhere, reflecting the absence of tourists and people in offices.

"Our digital business has continued its pattern of strong growth. We have recommenced manufacturing in Somerset to meet the demand for our product. Inventory levels remain on target, with no build-up of out-of-season merchandise," the company said.

The group started the new financial period with net cash of £7.2m and had extended bank facilities with HSBC until March 2022 and renegotiated covenants "to reflect the current Covid-19 world".