Handbag maker Mulberry sees shares soar as sales surge in the UK and Asia after a rebound in demand for luxury
- Global sales up 34% to £65.7m in the six months to 30 September
- Pre-tax profits came in at £10.2m compared to a loss of £2.4m last year
- End of lockdown enabled 139% growth in UK in-store purchases
Shares in handbag maker Mulberry rose 22.5 per cent today after it reported a rebound in luxury goods demand had sent sales soaring.
Mulberry revenues were up 34 per cent against 2020 levels, with the reopening of shops around the world delivering sales of £65.7million in the six months to 30 September.
And with sales back at pre-pandemic levels – having fallen to £48.9million at the same time last year – pre-tax profits came in at £10.2million compared to a loss of £2.4million last year.
The luxury handbag maker is plotting a return to Paris ‘once international tourism returns’
However, profits were bolstered by a one-off £5.7million injection from the disposal of its Paris lease, having closed the boutique on upmarket Rue Saint-Honore in July in response to a collapse in tourism.
UK sales growth jumped 36 per cent to £38million, including a 139 per cent bounce in in-store purchases, while Asia Pacific sales rose 23 per cent to £11.8million.
Earlier this month, consultancy Bain had predicted that the luxury goods sector would rebound this year from the health crisis due to higher spending in the US and China, particularly on high-end shoes, leather goods and jewellery.
This helped to offset sales lost from ‘the absence of tourists in the UK and the rationalisation of stores in Europe’.
Mulberry is not giving up on Paris, however, and plans to open a new store in the French capital ‘once international tourism returns in a location which supports the company’s omni-channel approach and optimises its customer centric retail experience’.
Meanwhile, rest of world sales nudged 7 per cent higher to £5.8million.
Mulberry said its financial performance during the half year ‘reflects the benefits of the actions we took during the pandemic and a strong consumer reaction to the group’s product’.
While many other firms have recently reported struggles with well-publicised supply chain issues, the firm said the combination of its ‘UK factories, careful planning and agile supply chains’ has enabled it to ‘navigate’ the worst of the problems, ‘with no impact on fulfilment to our sales channels’.
Its focus on full-price items, moving away from discounting, also helped profit margins improve from 59 per cent to 69 per cent during the period.
Since 30 October, Mulberry revenues are up 35 per cent on the same time last year and the firm expects second half gross margins to be around ‘or slightly higher than’ 67 per cent.
CEO Thierry Andretta said: ‘Our long-term strategy, namely our innovative and sustainable products made in our carbon neutral Somerset factories, our market-leading omni-channel distribution model, and our expansion into Asia Pacific, has delivered a strong financial performance.
‘The bold decisions we have taken with regards to focussing on our UK production capabilities, means that we are well placed for the festive trading period and beyond.’
Mulberry shares were up 22.5 per cent in afternoon trading to 370p, bringing their value more than 25 per cent above pre-Covid levels.