Mulberry bags bigger profits thanks to Asia and Brazil
Mulberry, the luxury fashion brand, has hailed the "march of the new order" of travelling Asian and Brazilian shoppers for driving a stunning uplift in its half-year profits and sales.
However, the group – which is best-known for its handbags that are endorsed by celebrities – saw a sharp slowdown in its underlying sales growth to 18 per cent over the last 10 weeks, which it blamed on being up against soaring revenues in the same period in 2010.
Still, Godfrey Davis, the chief executive of Mulberry, struck a bullish tone on its growth prospects, as it plots nine new stores globally in the second half.
He said: "We expect to continue showing a healthy rate of growth – that is the underlying story."
Fashion groups, such as Mulberry and Burberry, have continued to power ahead, as well-heeled shoppers globally show few, if any, signs of cutting back on buying luxury products.
Mulberry grew its pre-tax profits by 231 per cent to £15.6m over the six months to 30 September. This uplift was helped by a 2.3 per cent rise in the group's gross margins to 66.2 per cent.
Soaring retail sales up by 47 per cent – higher by 44 per cent on a like-for-like basis – also galvanised its profits.
Matching this underlying sales figure, Mr Davis said it has enjoyed "good growth" around the UK at its shops in cities, such as in Birmingham, Glasgow and Cardiff. But he particularly highlighted the uplift in London driven by overseas tourists. "We are seeing more of the travelling consumers visiting London and seeking out our stores. The tax-free shoppers have increased in our Bond Street, Harrods and Selfridges [shops]."
He added: "We are seeing significant numbers of Chinese in London and also Koreans, as well as Brazilians in London and New York. It is almost the march of the new order."
South Korea was Mulberry's fastest-growing country over the half year, although Mr Davis also cited a strong performance in Hong Kong.
Boosted by a 93 per cent rise in wholesale orders, Mulberry's total revenues jumped by 62 per cent to £72.3m.
The scale of its growth – helped by international expansion – is illustrated by the fact that its sales over the half year exceeded those in the 12 months to March 2010.
Mr Davis said: "This rate of growth is above our planned rate."
He attributed the slowdown in sales over the 10 weeks to 3 December to Mulberry delivering sales up by 66 per cent over the same period in 2010.
Its trading last year was boosted by the introduction of new ranges of its popular Bayswater and Alexa handbags around that time. The price range of these bags typically starts at £575 but goes up to £3,500.
Shares in Mulberry, which are up nearly 70 per cent this year, rose by 6p to 1,500p.
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