Fashion house Mulberry fell to a £14.2m loss in the last financial year, the firm announced today, as the coronavirus pandemic derailed the firm in its final month of trading.
The firm said that it had been on course to report a profit for the second half of the year before the virus shut down high streets around the UK.
Shares plunged nine per cent as markets opened this morning.
However, it added that trading for the current period was ahead of its previous expectations.
Having made a £1m loss in 2019, Mulberry swung into the red in the year ending 28 March,, reporting a £14.2m pre-tax loss.
After adjustments, this swelled to a £33.7m loss, which the company said was largely due to the expected impact of the pandemic on future trading.
The firm shut all of its UK stores on 21 March as the pandemic swept into the UK, hammering the retail sector.
Group revenue slipped 10 per cent to £149.3m, down from £166.3m the year before. Prior to the beginning of the pandemic, revenue for the year had been down four per cent.
The British brand said that over a quarter of its retail sales – 26 per cent – were now made up of international sales, which increased four per cent last year to £32.4m.
Mulberry’s board said that it would not pay a full year divided in order to “maintain a robust liquidity position given the uncertainty and duration of Covid-19.”
Since the beginning of the new financial year, Mulberry said that revenue was down 29 per cent compared to last year, but that figures were improving as stores continued to reopen.
As with many other retailers, the requirement for social distancing has sent digital sales booming at the firm, which said its digital revenue had risen 69 per cent.
Why it’s interesting
Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown, said:
‘’British brand Mulberry had been feeling the pinch even before the pandemic, amid a bun fight for the luxury bag shopper as customers held out for discounts.
“The firm said it had been swinging towards a profit for the second half of the year, but the turnaround plan went into reverse when lockdown forced its shops to close”, she said.
“Since its stores re-opened, business has been brisker than expected and the firm expects losses to be reduced in the second half of the year, but the dramatic decline in footfall in high end shopping districts, hit by the collapse in international tourism is still proving a major headache.”
What Mulberry said
Chief executive Thierry Andretta said: “The group has made strategic and operational progress during the most challenging market conditions in the history of the brand. Prior to the impact of the Coronavirus pandemic we were performing well and on-track to record a pre-tax profit in the second half of the year.
“The Group has been able to withstand some of the pressures that we, and indeed the entire retail industry, have been faced with.
“Post year end, the Group has continued to benefit from its long-term strategic focus with initial sales ahead of our 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.”