Mulberry Group PLC MUL Preliminary Results

  Mulberry Group PLC (MUL) - Preliminary Results

RNS Number : 3184F
Mulberry Group PLC
14 June 2012

MULBERRY GROUP PLC ("Mulberry" or the "Group")


Mulberry Group  plc, the  English luxury  brand, is  pleased to  announce  its 
results for the year ended 31 March 2012.


· Total revenues increased by 38% to £168.5 million (2011: £121.6

· Profit before tax up 54% to £36.0 million (2011: £23.3 million)

· Basic earnings per share up 47% to 43.9p (2011: 29.8p)

· Proposed dividend of 5.0p per share (2011: 4.0p per share)


· Bruno Guillon appointed CEO, with Godfrey Davis moving to Non-Executive

· 14 new stores opened during the year in the UK, the Netherlands, the
USA, Korea, Singapore, Thailand and Taiwan

· Global expansion continued with international revenues growing 61% to
£65.2 million (2011: £40.5 million), accounting for 39% of Group revenues
(2011: 33%)

· Online sales grew 58% to £14.5 million, accounting for 9% of Group
revenues (2011: 8%)

· UK factory extension completed, increasing UK production capacity by
30% and creating 60 jobs


· Retail sales up 12% for the 10 weeks to 9 June 2012. UK full price
stores like-for-like up 14%

· Autumn/Winter 2012 third-party wholesale orders 11% higher than the
Autumn/Winter 2011 season at the same time last year

· 16 new international store openings confirmed for 2012/13

· Second factory to be built in Somerset, doubling UK capacity and
creating 300 jobs


"This year has  seen us  deliver another  strong set  of results  and we  have 
performed well against expectations.

While the current economic conditions make the short term trading outlook more
challenging in some markets,  we remain confident  about Mulberry's long  term 
future. We  continue to  focus on  developing our  business  internationally, 
opening new stores and building the foundations for long term growth.

The investment  in a  second factory  in  the UK  will reinforce  the  Group's 
position as the largest UK manufacturer of luxury leather goods."


Pelham Bell Pottinger               
Daniel de Belder / Lucy Frankland  0207861 3232
Mulberry Investor Relations
Amelia Fincher                     0207 605 6771
Ben Thorne / Katherine Hobbs       02074844040
Jon Bathard-Smith / Nicola Tennent 0207 623 2323

Chairman's review

The Group has  continued to  deliver strong  sales and  profit growth.  Sales 
increased 38% to £168.5 million  for the year to  31 March 2012 (2011:  £121.6 
million) and profit  before tax increased  54% to £36.0  million (2011:  £23.3 
million). International sales were £65.2 million, 61% up on the prior  year. 
Gross margin increased to 66.2% (2011: 65.4%).

As a result  of sustained  investment over  a number  of years,  we have  been 
successful in developing  international demand for  the Mulberry brand.  This 
investment in people, product design, marketing and new store openings is  the 
driving force behind the growing  international success of our business  which 
continues to  become less  dependent upon  customers in  the UK  or any  other 
single market.

Looking forward,  we will  continue  our strategy  of  building the  brand  in 
international markets by opening new  stores and progressively increasing  our 
marketing activity to drive sales growth.


Retail sales from our own stores, department store concessions and online have
increased by 36% compared to the prior year to £99.7 million (like-for-like up

UK retail  sales  in  our  own 45  stores  and  department  store  concessions 
increased for the  year by 30%  to £77.2 million  (like-for-like up 27%).  In 
December, we opened a store in the Westfield development in Stratford ahead of
the 2012 London Olympics.

Online sales grew by 58% to £14.5  million during the year, accounting for  9% 
of Group sales  (2011: 8%).  In addition to  being a  profitable and  growing 
sales channel,  the  website  is a  key  marketing tool  for  the 
brand. We are  currently developing a  new platform which  will give us  even 
greater functionality and creative  freedom and this will  be launched by  the 
end of the 2012/13 financial year.

During the year we opened a flagship  store on Spring Street, New York.  This 
helped to  increase  North American  retail  sales  to £5.4  million,  up  69% 
compared to the prior year (like-for like up 20%). 

In Europe, retail sales from France and the Netherlands were £2.6 million,  up 
53% compared to the prior year  (like-for-like up 7%), reflecting the  opening 
of a new full price store in Amsterdam during November and an outlet store  in 
Roermond during March 2012.


Wholesale shipments to customers  during the year were  £68.8 million, up  43% 
compared to  the prior  year. The  wholesale business  includes sales  to  our 
European franchise  partners,  UK,  European and  North  American  independent 
retailers and  department  stores,  as  well as  sales  to  our  international 
distribution partners in Asia-Pacific and  the Middle East. In  Asia-Pacific, 
sales to  our partner  stores and  wholesale  accounts grew  by 70%  to  £25.1 
million. Asia-Pacific is now our  largest geographical segment for  wholesale 
sales, representing 36% of the total.

During the  year, ten  Mulberry stores  have been  opened by  our partners  in 
Singapore, Taiwan, Thailand and Korea (seven).


Leather goods and accessories remain our core business, with women's and men's
bags accounting for 77% of Group sales (2011: 76%). In Spring/Summer 2010  we 
launched the Alexa  bag, which  was an immediate  success and  added an  extra 
dimension to sales growth in the year  to 31 March 2011. A key challenge  for 
the year to 31  March 2012 was  to consolidate this bag  family into our  core 
business and build upon it. The results for the year show that this has  been 
achieved and the Alexa  has joined the Bayswater,  Daria and Lily families  of 
best-selling bags which underpin sales from one season to the next.

We continue to  develop the  women's apparel and  women's footwear  businesses 
which were the fastest growing categories during the year.


One of the strengths  of our business  is the quality of  our people. We  pay 
particular attention to succession planning in order to meet the needs of  the 
business as it grows and roles  change. In keeping with this approach,  Bruno 
Guillon joined Mulberry as  Chief Executive on 1  March 2012. He brings  with 
him a wealth of luxury goods  experience, having previously worked for  Hermès 
and LVMH. We have worked closely together for his first few months to  ensure 
a smooth management transition and, from the end of June 2012, I will move  to 
Non-Executive Chairman. On a personal note, I would like to thank all of  the 
Mulberry team, our partners  around the world and  our shareholders for  their 
enthusiasm, commitment and support over the last ten years whilst I have  been 
Chief Executive. I would also  like to wish Bruno  every success in his  new 

Chief Executive's report

I have joined Mulberry at a very exciting time. The team has produced another
set of strong  results for  the year  to 31  March 2012,  continuing to  build 
market share internationally, whilst generating positive cash flows that  will 
allow us to invest for future growth.

The opportunity for the Mulberry brand is significant, with the profits earned
from  its  strong  domestic  position   supporting  the  increasing  pace   of 
international expansion. The  challenge for the  next few years  is to  build 
upon the  solid  foundations that  have  been laid,  seize  the  international 
opportunity in  a way  that maintains  the careful  positioning of  the  brand 
within the luxury market,  whilst continuing to make  the enduring quality  of 
our products central to everything we do.


Mulberry is a luxury  fashion brand, anchored by  the quality of our  products 
and our heritage of English craftsmanship. With this in mind, during the year
we completed the extension of our Somerset factory allowing us to increase  UK 
capacity by 30% and create 60 jobs. We are also delighted to announce that we
will be opening a  second factory in Somerset.  This project will create  300 
jobs and double our UK  capacity. Our investment in  the new factory will  be 
approximately £7.5 million, with £2.5 million coming from the Regional  Growth 
Fund to support the recruitment and  training of new employees. We expect  to 
open the new factory by December 2013.


Demand for Mulberry products has continued since the year-end. During the  10 
weeks to 1 June 2012  total retail sales were 12%  above the same period  last 
year (like-for-like up  3%). UK  full price retail  sales have  grown by  14% 
like-for-like and  the  outlet business  has  decreased by  24%  like-for-like 
largely due to the tough comparative figures during the same period last year,
when outlet sales increased by 56%.

Within the 10  week period, April  saw slower  growth, but over  the last  six 
weeks UK full price  sales have improved, up  21% like-for-like. However,  we 
remain cautious as a result of the adverse macro-economic climate.

The Autumn/Winter 2012 season has started well with the third-party  wholesale 
order book 11% higher than the Autumn/Winter 2011 season at the same time last


During May 2012, we  launched the new  Del Rey bag,  inspired by the  American 
artist Lana Del Rey. The product illustrates the elegance and timeless luxury
of Mulberry and has been  well received which is  encouraging for the rest  of 
the Autumn/Winter 2012 season. Sales  of women's apparel and footwear  remain 
strong. These categories  remain central  to our  strategy and  we will  also 
expand  other  product  categories,  such   as  small  leather  goods,   men's 
accessories and other fashion accessories.

The Group's balance  sheet remains strong  with cash of  £27.3 million and  no 
debt at 31 March 2012.  This means that we continue  to have the capacity  to 
invest in new retail opportunities and other projects.

In Europe, we  opened a store  in Zurich on  24 May. In  Germany, we will  be 
opening shop-in-shops within the KaDeWe and Oberpollinger department stores in
Berlin and Munich  respectively and  a store  in Frankfurt  Airport. We  have 
signed leases for stores in Cologne and Berlin which will open around the  end 
of the financial year.

In North America, a store opened in the Short Hills Mall, New Jersey on 23 May
and our first West  Coast store will  open in San  Francisco during June.  We 
will open a store in Washington DC later in the year.

Our partner  in Korea,  which started  the current  year with  19 stores,  has 
already opened another store and is planning a further four before the end  of 
March 2013.

Club 21, our partner  for the rest  of Asia-Pacific, plans  to open stores  in 
Singapore, Japan and Shanghai. 

In total, we are targeting 15 to  20 new international store openings for  the 
current financial year (with three already opened and another 13 confirmed  to 


The Board is recommending the payment of a dividend on the ordinary shares  of 
5.0p per ordinary share (2011: 4.0p) which  will be paid on 17 September  2012 
to shareholders on the register on 17 August 2012.

Financial review

Gross margin

The Group's gross  profit as a  percentage of revenue  has increased to  66.2% 
from 65.4%  for  the  prior year.  This  increase  is due  primarily  to  the 
economies of scale achieved from increased volume.


Net operating  expenses for  the  year increased  by  £19.6 million  to  £76.1 
million (2011: £56.5 million). The main elements of this increase were:  £5.7 
million increased employee costs; £4.3 million additional spend on advertising
and promotion; £3.8  million variable rents  and agents' commissions  directly 
linked to the sales  growth and £3.3 million  costs relating to the  operating 
costs of new stores.


There are no exceptional  items in the  current year. In  the prior year,  an 
exceptional cost  of  £1.0  million  was  incurred  in  relation  to  deferred 
consideration for the USA business and £0.9 million of exceptional income  was 
recognised following the surrender of the  lease on the former flagship  store 
on New Bond Street.


Our associate in  Norway had  another successful year  with our  share of  its 
results increasing to £0.6 million (2011: £0.3 million).


The decrease in  net finance income  to £22,000 (2011:  £30,000) has  resulted 
from the continued low rates of interest available in the market.


The Group  has an  effective tax  rate of  29.7% for  the year  (2011:  26.9%) 
resulting in a tax charge of £10.7million (2011: £6.3 million). We expect to
see a future decrease  in the effective  tax rate in  line with the  announced 
reduction in the UK corporation tax rates over the next three years to 22%.

Balance Sheet

Investments  in  property,   plant  and  equipment   for  the  year   totalled 
£10.0million (2011: £12.8million)  and included £1.2  million investment  in 
the extension of our existing Somerset factory and £8.2 million investment  in 
new stores. The expenditure of £2.4million on intangible assets reflects the
on-going development of the Group's ERP system online capabilities.

Inventory levels have increased by £10.1million to £32.5million (2011: £22.4
million) which reflects the increased scale of the business and a build-up  of 
inventory to meet Autumn/Winter orders.

Cash flow

The cash  generated from  operations for  the year  amounted to  an inflow  of 
£30.1million (2011:  inflow  of £26.6million).  The  net cash  balance  has 
increased to £27.3million at 31 March  2012 (2011: £21.4million) due to  the 
operational performance of the Group.

earnings per share

The basic earnings per  share for the  year increased by  47% to 43.9p  (2011: 

Consolidated income statement

Year ended 31 March 2012

                                           Note      2012      2011

                                                    £'000     £'000
Revenue                                           168,451   121,645
Cost of sales                                    (56,964)  (42,144)
Gross profit                                      111,487    79,501
Administrative expenses                          (76,565)  (58,147)
Other operating income                                495     1,656
Operating profit                                   35,417    23,010
Operating profit before exceptional items     3    35,417    23,110

Share of results of associates                        562       305
Finance income                                         72        74
Finance expense                                      (50)      (44)
Profit before tax                                  36,001    23,345
Tax                                              (10,700)   (6,282)
Profit for the year                                25,301    17,063
Attributable to:
Equity holders of the parent                       25,301    17,063
                                                    Pence     pence
Basic earnings per share                      5      43.9      29.8
Diluted earnings per share                    5      43.4      29.1

Consolidated statement of comprehensive income

Year ended 31 March 2012

                                                               2012    2011

                                                              £'000   £'000
Profit for the year                                          25,301  17,063
Exchange differences on translation of foreign operations     (207)       1
Total comprehensive income for the year                      25,094  17,064
Attributable to:
Equity holders of the parent                                 25,094  17,064

Consolidated balance sheet

At 31 March 2012

                                     2012      2011

                                    £'000     £'000
Non-current assets
Intangible assets                   3,984     2,134
Property, plant and equipment      24,212    18,207
Interests in associates               357       210
Deferred tax assets                     -        69
                                   28,553    20,620
Current assets
Inventories                        32,546    22,408
Trade and other receivables        14,912    12,186
Cash and cash equivalents          27,293    21,373
                                   74,751    55,967
Total assets                      103,304    76,587
Current liabilities
Trade and other payables         (34,627)  (30,476)
Current tax liabilities           (6,188)   (4,079)
                                 (40,815)  (34,555)
Non-current liabilities
Deferred tax liability               (26)         -
Total liabilities                (40,841)  (34,555)
Net assets                         62,463    42,032
Share capital                       2,982     2,943
Share premium account              11,578     7,007
Own share reserve                 (3,966)     (621)
Capital redemption reserve            154       154
Special reserves                    1,467     1,467
Foreign exchange reserve              179       386
Retained earnings                  50,069    30,696
Total equity                       62,463    42,032

Consolidated statement of changes in equity

Year ended 31 March 2012

                        Equity attributable to equity holders of the parent
                          Share     Own                Foreign               
                         premium   share                 exchange
                   Share account reserve Capital Special  reserve Retained       
                                         reserve reserve          earnings
                 capital                                                     Total
                   £'000   £'000   £'000   £'000   £'000    £'000    £'000   £'000
As at 1 April      2,943   7,007   (107)     154   1,467      385   14,616  26,465
Total                  -       -       -       -       -        1   17,063  17,064
income for the
Charge for             -       -       -       -       -        -      701     701
Exercise of            -       -       -       -       -        -    (418)   (418)
share options
Own shares             -       -   (514)       -       -        -        -   (514)
Ordinary               -       -       -       -       -        -  (1,266) (1,266)
dividends paid
As at 31 March     2,943   7,007   (621)     154   1,467      386   30,696  42,032
Total                  -       -       -       -       -    (207)   25,301  25,094
income for the
Issue of share        10   3,782       -       -       -        -        -   3,792
Charge for             -       -       -       -       -        -      701     701
Exercise of           29     789       -       -       -        -  (4,319) (3,501)
share options
Own shares             -       - (3,345)       -       -        -        - (3,345)
Ordinary               -       -       -       -       -        -  (2,310) (2,310)
dividends paid
As at 31 March     2,982  11,578 (3,966)     154   1,467      179   50,069  62,463

Consolidated cash flow statement

Year ended 31 March 2012

                                                                2012      2011

                                                               £'000     £'000
Operating profit for the year                                 35,417    23,010
Adjustments for:
Depreciation of property, plant and equipment                  3,992     2,261
Amortisation of intangible assets                                494       837
Loss on sale of property, plant and equipment                    (8)       152
Effects of foreign exchange                                    (109)        24
Share-based payments charge                                      701       701
Operating cash flows before movements in working capital      40,487    26,985
Increase in inventories                                     (10,151)  (13,318)
Increase in receivables                                      (2,750)   (3,848)
Increase in payables                                           2,530    16,805
Cash generated from operations                                30,116    26,624
Corporation taxes paid                                       (8,495)   (3,856)
Interest paid                                                   (50)      (44)
Net cash inflow from operating activities                     21,571    22,724
Investing activities:
Interest received                                                 96        47
Dividend received from associate                                 408       308
Purchases of property, plant and equipment                   (8,632)  (11,176)
Proceeds from sale of property, plant and equipment               33         -
Acquisition of intangible fixed assets                       (2,153)     (503)
Net cash used in investing activities                       (10,248)  (11,324)
Financing activities:
Dividends paid                                               (2,310)   (1,266)
Proceeds on issue of shares                                      818         -
Settlement of share awards                                   (4,358)     (418)
Investment in own shares                                         447     (514)
Net cash used in financing activities                        (5,403)   (2,198)
Net increase in cash and cash equivalents                      5,920     9,202
Cash and cash equivalents at beginning of year                21,373    12,171
Cash and cash equivalents at end of year                      27,293    21,373


1. Basis of preparation

The financial  information in  this announcement,  which was  approved by  the 
Board of  Directors  on  13  June 2012,  does  not  constitute  the  Company's 
statutory accounts for the years ended 31  March 2012 or 2011, but is  derived 
from those accounts.

Statutory accounts for the year ended 31 March 2011 have been delivered to the
Registrar of Companies and those  for the year ended  31 March 2012 have  been 
approved and will  be delivered to  the Registrar of  Companies following  the 
Company's Annual  General  Meeting.  The  auditors  have  reported  on  those 
accounts, their reports  were unqualified and  did not draw  attention to  any 
matters by  way of  emphasis  without qualifying  their  reports and  did  not 
contain any statement under section 498 (2) or (3) of the Companies Act 2006.

Whilst the financial information included in this preliminary announcement has
been completed in accordance with International Financial Reporting  Standards 
(IFRS), this announcement  itself does not  contain sufficient information  to 
comply with IFRS.

2. Accounting policies

The Group's  financial  statementsfor  the  year  ended  31  March  2012have 
beenprepared in accordance with the measurement criteria of the International
Financial Reporting Standards (IFRS) as adopted for use in the European Union.

During  the  current  year  the  following  new  and  revised  Standards   and 
Interpretations have been adopted but have not had an impact on the Group:

· IAS 24: Related party disclosures

At the  date of  authorisation of  these financial  statements, the  following 
Standards and Interpretations which have  not been applied in these  financial 
statements were in issue but not yet effective:

· IFRS 9: Financial instruments

· IFRS 10: Consolidated Financial Statements

· IFRS 11: Joint Arrangements

· IFRS 12: Disclosure of Interests in Other Entities

· Amendment to IAS 27: Separate Financial Statements

· Amendment to IAS 28: Investments in Associates and Joint Ventures

· IFRS 13: Fair Value Measurement

· IAS 19: Employee Benefits

The Directors anticipate that the adoption of these Standards and
Interpretations in future periods will have no material impact on the
financial statements of the Group.

For the year ended 31 March 2012, the financial year runs for the 53 weeks to
31 March 2012 (2011: 52 weeks ended 26 March 2011).

3. Exceptional income and expenses

There was no exceptional income or expenses in the current year.

On 5 October 2009, a transaction to assume operational control of the two  New 
York  stores  and  the  distribution  rights  to  the  North  American  market 
previously  held  by  our  joint  venture  partner,  Mulberry  USA  LLC,   was 
completed. As  part  of  this  agreement, deferred  consideration  of  up  to 
£1,000,000 would become payable to Challice Limited (the remaining shareholder
of Mulberry USA LLC and the majority  shareholder of Mulberry Group plc) on  a 
stepped basis ifsales generated from the USA operations during the third year
post-completion exceeded certainagreed thresholds.  The consideration was  to 
be payable in cash  or, at Mulberry Group  plc's option, newMulberry  shares, 
the number of  shares being calculated  at the then  prevailing share  price. 
Following the growth in the USA operations, as at 31 March 2011 the  Directors 
concluded that it was  probable that the  deferred consideration would  become 
payable and as such a  provision for £1,000,000 was  made and disclosed as  an 
exceptional cost. This has subsequently been paid in full during April 2012.

As part of the  Group's future growth strategy,  the decision was made  during 
the year ended 31 March 2010 to relocate the flagship New Bond Street store to
an alternative  site on  New Bond  Street.  An agreement  was made  with  the 
landlord to take back the lease of the old New Bond Street store in return for
a payment to the Group of £900,000. This was received during January 2011 and
disclosed as exceptional income.

4. Dividends

The dividends approved and paid during the year are as follows:

                                                                   2012   2011

                                                                  £'000  £'000

Final dividend for  the year  ended 31  March 2011  of 4p  (2011: 2,310  1,266
2.2p) per share paid in August 2011
Proposed final dividend for  the year ended 31  March 2012 of  5p 2,982  2,367
per share (2011: 4p)

This proposed final  dividend is subject  to approval by  shareholders at  the 
Annual General  Meeting and  has not  been included  as a  liability in  these 
financial statements.

5. Earnings per share ('EPS')

                                     2012   2011

                                    pence  pence

Basic earnings per share             43.9   29.8
Diluted earnings per share           43.4   29.1
Adjusted basic earnings per share    43.9   30.4
Adjusted diluted earnings per share  43.4   29.7

Earnings per share is calculated based on the following data:

                                                                  2012    2011

                                                                 £'000   £'000

Profit for the year for basic and diluted earnings per share    25,301  17,063
Deferred consideration                                               -   1,000
Lease income                                                         -   (900)
Tax impact of exceptional lease income                               -     252
Adjusted profit for  the year  for adjusted  basic and  diluted 25,301  17,415
earnings per share

                                                                 2012     2011

                                                              million  million

Weighted average number of ordinary shares for the purpose of    57.6     57.3
basic EPS
Effect of dilutive potential ordinary shares: share options       0.7      1.4
Weighted average number of ordinary shares for the purpose of    58.3     58.7
diluted EPS

The weighted  average number  of  ordinary shares  in  issue during  the  year 
excludes those held by the Mulberry Group Plc Employee Share Trust.

6. Information

Copies of the Annual Report and financial statements will be posted to
shareholders. Further copies can be obtained from Mulberry Group plc's
registered office at The Rookery, Chilcompton, Somerset, BA3 4EH.

Copies of this announcement are available for a period of one month from the
date hereof from the Company's registered office, and from the Company's
nominated adviser, Altium Capital Limited, 30 St James's Square, London, SW1Y

                     This information is provided by RNS
           The company news service from the London Stock Exchange


FR GMGMVKFRGZZM -0- Jun/14/2012 06:00 GMT
Press spacebar to pause and continue. Press esc to stop.