New designs and website improvements lifted sales and profits at Mulberry in the last year, but the British brand has warned that uncertainty around the general election and terrorist attacks hit UK sales in recent months.
Pre-tax profits rose 21% to £7.5m as sales rose 8% to £168.1m in the year to 31 March, led by 10% growth in UK retail sales, including 19% growth online. Online sales now make up 15% of the total, up from 10% in 2014.
“We have made good progress,” Andretta said. He said Mulberry was attracting new more aspirational customers with updated designs such as a zipped version of its bestselling Bayswater bag.
Two-thirds of the brand’s bags sold outside the UK, and half of those sold in the UK, now come from Mulberry’s latest collections designed by its creative director, Johnny Coca, who also joined from Céline in 2015.
Sales at established UK stores rose 5% in the year to 31 March as some London outlets enjoyed double digit growth in tourist visitors on the hunt for bargains prompted by the drop in the value of the pound against the euro and dollar since the Brexit vote last summer. But that growth slowed to just 2% in the 10 weeks since the year end as Andretta said footfall at its UK retail stores had fallen by 1%.
“Perhaps it’s down to the election or terrorist attacks but we have seen double-digit growth via digital,” Andretta said. He said sales might also have been held back by a lack of promotions and new bag launches in the period compared to last year during a traditionally quiet time for the brand.
Mulberry warned in December that prices might have to rise because of the increased cost of importing leather and other items to make its bags. But Andretta said he now expected costs to remain flat, partly thanks to increased production and efficiency at its two UK factories. He said the latest collection of bags, which is just going into stores, was priced at no more than £995, in line with the group’s previous plan.
He said Mulberry remained committed to making at least half of its products in the UK, but it might have to “wait a bit” before confirming plans for a third British factory. He said the decision was more reliant on Mulberry increasing the number of items it sold than on the outcome of Brexit talks. “To have another factory we need to have volumes up by 20% from today,” he said. “It’s a question of timing.”
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