Mulberry swings to loss in face of increased costs

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Global handbag and accessories retailer Mulberry has swung to a loss as it grapples with factors such as the end of government Covid-19 support and the cost-of-living crisis.

Mulberry bag

Mulberry says it intends to be a net-zero business by 2035

For the 26 weeks to October 1, Mulberry reported a loss before tax of £3.8m, down from profit before tax of £10.2m the previous year after the retailer kept £2m of pandemic-related business rates relief and pocketed a one-off £5.7m from the sale of a Paris store lease.

Mulberry also reported a loss before tax excluding adjusted items of £2.8m, down from a profit of £4.5m in the 2021 financial year, which it said reflected additional investment.

Group sales were down 1% during the period to £64.9m. UK retail sales were down 10% to £34.1m, while sales in China were more resilient, up 6% despite strict Covid-19 restrictions remaining in the country.

International retail sales were in line with the same period last year at £17.5m, supported by the opening of new stores in China and an online store in South Korea.

In terms of current trading, the retailer said it had seen an improvement in sales for the eight weeks to November 26 compared to the same period last year.

Chief executive Thierry Andretta said: “We have delivered a resilient performance across the group, supported by strong international demand and continued investment in the UK.

“Mulberry has a distinct brand identity, combining British heritage with innovative products and modern craft. What helps set us apart is our commitment to sustainability, as articulated in our ambitious ‘Made to Last’ manifesto, in which we announced our intention to become net zero by 2035. This manifesto frames many of the strategic and operational decisions we make – from our commitment to source 100% of our leather from environmentally accredited tanneries to the focus we give to circularity for our preloved bags programme. Most important is our Lifetime Service Centre in our Somerset factory where customers can get their bags and leather goods repaired and rejuvenated alongside the new designs and new collections.

“Looking ahead, we are confident in our ability to execute our strategy and to continue to invest across the group for our future growth, in spite of the challenging economic and geopolitical backdrop. We are well placed for the festive trading period and will continue to drive the business forward to the benefit of all stakeholders.”