What has happened? I occasionally stroll around Mulberry in the hope of finding a "Keep the wife happy" present and the local store in North Oxfordshire recently has become as lifeless as a Dodo whereas previously it was the best store in Bicester.
A company with good products and good management should always succeed, but I was left wondering by my experience.
"Without a full-time chief executive since March and having already warned that this would be a challenging year, the omens for handbag designer LSE:MUL:Mulberry were never good. And so it has proved. First-half losses are now expected to leave ..."
Mulberry Group plc, the English luxury brand, is updating the market on trading for the six months ended 30 September 2014 and the outlook for the remainder of the current financial year ending 31 March 2015.
As reported on 12 June 2014, the company anticipated a challenging year. The first half was expected to be particularly difficult, with it taking some time for the measures implemented after the April management change to take effect. Actual trading conditions have been more difficult than expected, in part due to the continuing headwinds affecting the luxury sector. Whilst sales trends have improved as the period progressed, indicating that the right steps are being taken to restore the business to growth, H1 revenues were down 17% to £64.7 million (2013: £78.1 million) and profit before tax for the full year to March 2015 is expected to be significantly below current expectations.
The Retail business fell by 9% to £45.1 million (2013: £49.5 million), with a decline in the UK offset by growth in International markets:
· UK full price sales were down £2.7 million (-12%) to £20.9 million. Sales have been adversely affected by a decline in footfall, particularly tourist shoppers;
· UK outlet sales have continued to normalise from unusually high levels during the prior year, when discontinued inventories were being cleared. Outlet sales were down £3.0 million (-23%) to £10.1 million;
· International Retail sales were up £1.2 million (+20%) to £7.5 million;
· Online sales were up £0.1 million (+1%) to £6.6 million, accounting for 10% of Group sales (2013: 8%).
Wholesale sales declined during H1 by £9.0 million (-31%) to £19.6 million. This decline, which has been greater than anticipated, reflects a combination of inventory reduction and conservative ordering by our Asian and European franchise partners.
Following the launch of the Tessie bag family during June, we introduced a new family of bags developed with Cara Delevingne at the beginning of September. The reaction to these bag families has been positive and they have contributed to the improving sales trends. The next new product arrives in-store during November 2014 in time for Christmas, with the launch of the new Blossom tote bag, the Mini Lily and a new collection of small leather goods.
We expect the wholesale sales pattern to continue for the remainder of this year before improving during 2015/16 as partner store sales stabilise and their inventories reduce.
We maintain tight cost control across the business, albeit with a large proportion of costs remaining fixed. The opening of the Paris flagship store, planned for late Spring 2015, will mark the end of a period of accelerated investment in new stores establishing the foundations for the next phase of growth in both Europe and North America. This investment has involved significant capital investment and increased the fixed costs of the business substantially. Looking forward, the focus will be on growing sales to generate a return on this investment.
We remain confident that we are taking the right steps to restore the business to growth. As we have explained, we expect that the improvement will be progressive over the medium term.
GODFREY DAVIS, EXECUTIVE CHAIRMAN, COMMENTED:
"As I explained in June, my first actions on returning as acting chief executive focused upon reinforcing our product ranges. I explained that the impact would be progressive and should produce benefits over the medium term. The new products are beginning to reach our shops with the launch of the Cara Delevingne bags at the beginning of September and with further new product being offered in our shops during November. As expected, the first half has been difficult, but the Group remains profitable and cash generative, giving us the resources to invest for the future. Des
OFF TOPIC but important that all AIM investors understand the pitfalls of investing in stocks that are being shorted down to rock-bottom levels? So you think that is 'cute', now you can buy at the lowest sp for months.........you've gotta be kidding...read on:-
UPdate...epitition (closes 24th September 2014, so still plenty of time to get those votes in)
A lot of irate investors ... are voting for this campaign...?
Thanks to all those that have supported this HMGovt epetition !
~~~~~ *3,851 voted so far~~~~~(That's a lot of irate investors?)
AND THEY CAN'T ALL BE WRONG ?
HMGovt epitition to make short-selling illegal (or better regulated?)
It is a good brand that was doing very well until the Board decided to appoint a totally unsuitable CEO and pursue a strategy that ran the company into the ground and alienated its' core customer base. If Mulberry customers wanted Hermes, they would buy Hermes bags.
Hi Berty, I'd love you to be bothered and tell us the reasons why Mulberry shares are going to fall much further. You might be right but it'd be interesting to understand the financial and marketing, management reasons why Mulberry can not be a successful brand and generate good business again?
I'm not a shareholder so have no axe to grind here or point to make. I did make a lot from Supergroup so I'm interested to look closer at Mulberry.
One thing does spring to mind on first looking at this is that they appear to have had problems with the French CEO who has changed the strategy of the company to be absolutely high end and it's backfired because they have been priced out of their main markets (UK and Korea). Personally I'd have been more concerned if they had lowered the price and still failed to sell.
"The slump in profit at Kering, the French luxury goods conglomerate, could reflect the times ahead for other luxury goods retailers, as Chinese consumers in particular turn away from overtly branded merchandise to more discreet luxury.Sales of ..."
hahaha why botrher with a 20% discount card when you can get a real leather fake that no one will be able to spot as a fake?! just cruise on the web long enough and yes indeed, you will find some extremely good fake Mulberry suppliers....
the real thing is monstrously over priced !! just like the shares...!!!
well, it didn't take that long to be proved correct...fact is "Mulberry also said weak demand in South Korea was behind the profit drop"....
Keep selling, no end in sight to shrinking revenues, sales are down 3% too.
But the company said that the all-important Christmas period, recorded as the eight weeks to January 25, were down 7%. UK sales represented 65% of the groups revenue in 2012-13, therefore it suggests that the home market is dragging the company down.
So, falling sales at home and abroad huh....great, not.
"Handbag group Mulberry has seen its shares plunge 28 per cent this year as fears over future growth mount as the financial crisis hits top-end buyers. This week's profit warning gave the shares another handbagging after the company announced that it expected group revenue growth to be below market expectations and said profits would be lower than last year.
Even after the recent falls, the company's rating remains high. The shares are trading on a 2013 earnings multiple of 22.1, falling to 17. This is still discounting a significant amount of future growth.
Questor in The Telegraph thinks the company has a substantial opportunity, but regards the rating as still too high. It last said avoid at £15.66 in June and the shares are now 35 per cent lower.
On valuation terms, the rating has to remain 'avoid' (Last IC rating: Sell, 24 Oct). "
a bounce to 1250p? I VERY much doubt that! Not with the S&P likely to fall 20% from its recent highs. There is just no volume or appetite - especially for a company that's just announced a profits warning. Yes there's technical trading but not on that scale.
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