International Sales Push Mulberry into Triple Half Year Profit

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Somerset, England—Buoyed by sales surges in Europe, Asian and the United States, British handbag and accessories brand Mulberry reported today that its first half profit tripled from last year.

For the six months ended Sept. 30, Mulberry reported its pre-tax profit rose 231% to 15.6 million pounds (about $24.5 million). That exceeded analysts’ average forecast for 12 million pounds.

Sales in its first half increased by 62% to 72.3 million pounds, up from 44.7 million a year ago. Comparable store sales gained 44%. Wholesale shipments were up 93% with the company citing its fall/winter wholesales orders up 47% compared to a year ago. Gross margin also improved, rising to 66.2% from 63.9% a year ago.

While the United Kingdom account for most of its sales, Mulberry’s expansion into other parts of Europe, the United States and Asia, also have seen growth. In the United States, Mulberry had an 82% increase and said that its North American wholesale shipments are up 75%.

U.S. Sales Jump 82%

“Asia is the fastest-growing market, but actually we still have plenty of areas to penetrate in Europe and the States, so those are growing very strongly as well. We like to spread the risk,” Godfrey Davis, Mulberry’s ceo told analysts today.

In June, the company said it expected its international business to overtake its U.K. business within two years. Mulberry plans to open nine stores in the second half. Expansion in Asia includes a recently signed 10-year distribution deal to sell its products in Japanese department stores and Mulberry plans flagship shops in Tokyo and Osaka, and stores in South Korea and Singapore.

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“Our strategy to focus on international expansion continues to bear fruit,” David said. “Against the backdrop of economic uncertainty, Mulberry continues to build market share internationally and we remain cautiously optimistic about the future prospects of the business.”

Indeed, Mulberry still has yet to truly exploit the Greater China market, so far it has only one store there.

According to analysts’ estimates, Mulberry could reach a full year profit of 28 million to 30 million pounds, with the average estimate forecasting about 29.5 million pounds.

While Mulberry has added apparel and footwear to its offerings, handbag accounted for 77% of its first half sales followed by small leathergoods at 12%

Mulberry “remains under-represented in most of the largest luxurygoods markets globally, with a focused strategy in place to grow its footprint,” Altium Securities analyst John Cummins said.

Shares in Mulberry have risen more than 60% this year, giving the brand an estimated valuation of almost 900 million pounds.


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