TIDMMUL
RNS Number : 9117F
Mulberry Group PLC
21 July 2021
Mulberry Group plc
Preliminary results for the 52 weeks ended 27 March 2021
Strong growth in Asian markets and robust digital
performance
Mulberry Group plc ("the Group" or "Mulberry"), the British
luxury brand, announces results for the 52 weeks ended 27 March
2021 (the "period").
FINANCIAL RESULTS
The income statement set out below is included to show the
underlying performance of the Group. It does not form part of the
consolidated financial statements for the 52 weeks ended 27 March
2021 and 52 weeks ended 28 March 2020.
52 weeks ended 27 March 52 weeks ended 28 March
2021 2020
GBP'million Underlying Adjusting Reported Underlying Adjusting Reported
items items
Revenue 115.0 115.0 149.3 - 149.3
------------------------- ------------------------- ------------------------- ------------------------- ------------------------- -------------------------
Gross profit 73.1 73.1 91.1 - 91.1
Impairment
charge
related to
property,
plant and
equipment - (0.6) (0.6) - (7.1) (7.1)
Impairment
charge
related to
right
of use assets - (5.7) (5.7) - (24.9) (24.9)
Lease
modification - 4.0 4.0 - - -
Restructuring
costs - (2.4) (2.4) - (0.7) (0.7)
Store closure
credit/(costs) 3.7 3.7 - (0.9) (0.9)
Other operating
expenses (68.9) (0.3) (69.2) (101.5) (0.1) (101.6)
Other operating
income 6.0 6.0 1.1 - 1.1
Operating
profit/(loss) 10.2 (1.3) 8.9 (9.3) (33.7) (43.0)
Share of
results
of associates (0.1) (0.1) - - -
Finance income - - 0.1 - 0.1
Finance expense (4.2) - (4.2) (5.0) - (5.0)
Profit/(loss)
before tax 5.9 (1.3) 4.6 (14.2) (33.7) (47.9)
Financial Highlights
-- Group revenue down 23% to GBP115.0m (2020: GBP149.3m)
primarily reflecting impact of COVID-19 and closure of majority of
physical stores during the period
-- Digital sales up 55% to GBP56.4m (2020: GBP36.3m)
-- International retail sales increased 4% to GBP33.8m (2020: GBP32.4m)
o Asia Pacific growth of 36% driven by ongoing development in
the region, China retail sales up 81% and South Korea retail sales
up by 36%, Rest of World retail sales down 27%
-- Underlying profit before tax of GBP5.9m (2020: loss before tax GBP14.2m)
Operating Highlights
-- Digital sales represented 49% of total revenue (2020: 24%),
as customers migrated to digital channels
-- Improved margins due to lower markdown sales
-- Established a European distribution facility to support online sales post-Brexit
-- Re-launched best-selling Alexa family as part of 50th anniversary celebrations
Sustainability Highlights
-- Made To Last Manifesto was launched, with a commitment to
transform the business to a regenerative and circular model
encompassing the entire supply chain, from field to wardrobe by
2030
-- 80% of the collection now using leather sourced from
environmentally accredited tanneries; this will increase to 100% by
Autumn/Winter 2022
-- Repairs Centre at The Rookery restores more than 10,000 bags a year
-- Became an accredited Living Wage Employer
-- Supported the community and the response to the COVID-19 pandemic:
o Produced over 15,000 reusable PPE gowns for frontline NHS
workers
o Worked with the Felix Project to provide over 177k meals for
those in need
o Partnered with National Emergencies Trust to help deliver
vital aid to those most affected by the coronavirus outbreak
Current Trading
-- Group revenue in the period to date is 45% ahead of last
year, with retail revenue 30% ahead due to a strong recovery in the
UK, and continuing growth in Asia, with China retail sales up
46%.
THIERRY ANDRETTA, CHIEF EXECUTIVE OFFICER, COMMENTED:
"I have been immensely proud to lead Mulberry this year. In the
last 12 months our teams have faced enormous challenges posed by
the global health crisis and have responded with resilience,
resolve and passion.
"We have been able to leverage our leading omni-channel
position, achieving very strong growth in Asia, and have served the
communities in which we operate, including repurposing our
factories to produce over 15,000 reusable PPE gowns for frontline
NHS workers.
We have delivered a robust financial performance and have made
good strategic progress in our journey to build Mulberry as a
leading sustainable global luxury brand."
FOR FURTHER DETAILS PLEASE CONTACT:
Mulberry
Charles Anderson Tel: +44 (0) 20 7605 6793
Headland (Public Relations)
Lucy Legh / KIRSTY CARRUTHERS Tel: +44 (0) 20 3805 4822
mulberry@headlandconsultancy.com
GCA Altium Limited (NOMAD)
Tim Richardson Tel: +44 (0) 20 7484 4040
Chairman's Letter
Dear Shareholder,
This has been a year like no other, with the COVID-19 pandemic
affecting all our lives in ways that we could scarcely imagine
prior to the outbreak. Whilst our performance over the past year
has undoubtedly been affected, I am incredibly proud of Mulberry's
response; reacting swiftly to adapt to the new circumstances,
protecting our people, leveraging our global digital network to
replace retail sales with digital wherever possible, ensuring the
Group was the correct size and structure to reflect market
conditions and conserving our capital. it is because of this
response, combined with the growing contribution from our Asian
business, that we have been able to rebuild our capital reserves
and can now look ahead with optimism.
Looking ahead, our mission is to be the leading responsible
British luxury lifestyle brand and a pioneer in sustainability. We
are making huge steps towards achieving this: in April, on World
Earth Day, we launched our Made to Last Manifesto outlining our
vision and sustainability targets.
As we celebrate 50 years of Mulberry this year, we look back at
our values that have shaped us as a business, namely a Made to Last
ethos, combined with responsible innovation. This year we reaffirm
our commitment to keeping these values at the heart of our brand,
to ensure we are building a sustainable legacy for the next 50
years and beyond.
In the coming months, we will be expanding our circular economy
programme, via Mulberry Exchange, Mulberry.com and Vestiaire
Collective, giving our customers access to vintage pieces, designed
to be handed down from generation to generation. We will also
launch our first, locally made, "farm to finished product" bags,
using the world's lowest carbon leather. The collection further
underpins our commitment to reaching zero carbon emissions by
2035.
I am extremely proud of the achievements we have made to date,
and the progress we are making towards our targets. Further actions
for change, and how we are building a future regenerative and
circular model encompassing the entire supply chain, are detailed
later in this report.
I would like to take this opportunity to thank all the team for
their hard work and ongoing commitment as we continue to navigate
these times of uncertainty. Together with our strategy, which
Thierry will outline in more detail on the following pages, we are
in a strong position for a prosperous future.
Godfrey Davis
Chairman
21 July 2021
Strategic Report
Chief Executive's Statement
Overview
I have been immensely proud to lead Mulberry this year. In the
last 12 months our teams have faced enormous challenges posed by
the global health crisis and have responded with resilience,
resolve and passion. We have been able to leverage our leading
omni-channel position, and have served the communities in which we
operate, including repurposing our factories to produce over 15,000
reusable PPE gowns for frontline NHS workers. We have not only
delivered a robust financial performance, but we have made good
strategic progress in our journey to build Mulberry as a leading
sustainable global luxury brand.
Robust Financial Performance
Our results demonstrated our resilience and adaptability in
responding to the COVID-19 pandemic:
During the 52 weeks to 27 March 2021 our stores were subject to
a number of national lockdowns and our UK factories were closed
during the first lockdown. This materially affected our ability to
trade. The strength of our omni-channel business and ongoing
development in Asia Pacific helped to offset the impact of these
lockdowns with Group revenue down 23% to GBP115.0m (2020:
GBP149.3m). China retail sales increased by 81% and South Korea
retail sales increased by 36%, which helped to drive the 36%
increase in Asia Pacific retail sales. Digital sales increased by
55%, as our market leading global digital network enabled us to
respond with agility, replacing retail sales with digital wherever
possible. Digital sales as a proportion of Group revenue were 49%
(2020: 24%)
The Group's underlying profit before tax was GBP5.9m (2020: loss
before tax GBP14.2m), reflecting the strength of our omni-channel
business, cost actions taken in response to COVID-19 and government
support programmes, combined with a significantly improved
contribution from our Asian businesses, which moved into profit
after a number of years of heavy investment. We ended the period
with net cash of GBP11.8m (2020: GBP7.2m) and deferred liabilities
of GBP4.7m (2020: GBP3.0m).
We are grateful for the government support, including the UK
Coronavirus Job Retention Scheme ("CJRS"), which enabled us to take
a measured look at the changes required to our business as a result
of COVID-19. Without the time afforded by the CJRS ([1]) , we would
have been forced to act earlier and make deeper cuts.
The success of our direct to customer model means that we
continue to enhance the customer experience, drive customer
engagement, and build brand loyalty. In April 2020, we implemented
a new global pricing strategy, which now applies the same retail
price globally, which has helped to drive growth.
Sustainability
The Made to Last manifesto sets Mulberry apart from our
competition. This ambitious commitment, made in our 50(th) year, to
transform the business to a regenerative and circular model
encompassing the entire supply chain, from field to wardrobe by
2030 demonstrates our desire to be a brand that makes a difference
and does the right thing. We are proud to be a real living wage
employer and are committed to working with our suppliers to ensure
that workers not directly employed by Mulberry will also receive
the same.
Today, 82% of our collection uses leather sourced from
environmentally accredited tanneries, which will increase to 100%
by AW22. In April 2021 we also relaunched our signature Scotchgrain
in a new Eco fabrication, made from recombined Bio Plastic
materials. I'm also very proud that our Repairs Centre at The
Rookery, one of our Somerset factories, restores more than 10,000
bags a year, further demonstrating that our products are truly Made
to Last.
We launched Mulberry Exchange in February 2020, our circular
re-sell and buyback programme. This was further extended in March
2021 as we launched on Vestiaire Collective's Brand Approved
program, and also through the digital launch of Mulberry Exchange
program on mulberry.com in April 2021.
The past 12 months have demonstrated more than ever the need to
play an active role in supporting the communities of which we are a
part. At the height of the pandemic, we repurposed our UK
factories, producing over 15,000 reusable PPE gowns for frontline
NHS workers. We were very proud to partner with the National
Emergencies Trust to help deliver vital aid to those most affected
by the coronavirus outbreak across the UK, donating 15% of our UK
digital sales from March 23rd - April 24th to this important cause,
raising a total of GBP75,000. In addition, in December 2020,
Mulberry partnered with London based charity, The Felix Project, to
provide over 177,000 meals for those most in need.
[1] For the 52 weeks to 27 March 2021 GBP4.8m of grants were
received under the CJRS.
Marketing
A digital first approach has been important for our marketing
strategy. The team has continued to impress by finding new and
innovative ways to reach our global community and instilling a
sense of solidarity among our customer base.
With much of the world in lockdown, April 2020 saw Mulberry
reach out to its extensive community with the 'Take Root, Branch
Out campaign' that ran throughout the summer. November 2020 saw the
highly successful relaunch of a new, sustainable version of its
iconic Alexa bag. The 360-degree global campaign engaged VIP
customers and focussed on localised influencer seeding, content
collaborations and targeted media partnerships. The relaunch was
further supported by an impactful partnership and content
collaboration with luxury online retail platform, Farfetch. The
campaign drove widespread conversation and has ensured the iconic
silhouette bag is once again one of Mulberry's best sellers.
Mulberry took an agile and responsive approach to its festive
campaign in December, with joy and community at its core. The
creative campaign put product at the forefront and highlighted
Mulberry's exceptional services offering through a series of
animations. The content was brought to life through a digitally led
campaign that tested new and innovative media formats, and a
community-focused partnership with food redistribution charity, The
Felix Project.
Welcoming in the brand's 50th anniversary, February 2021 saw
Mulberry launch the Icon Editions collection, a hand-picked
offering of Mulberry's most era-defining silhouettes - recreated in
miniature sizes. The impactful, digital first approach was
supported with global influencer seeding and a series of content
collaborations. Additionally, we were delighted to sponsor the
V&A exhibition Bags: Inside out, which celebrates the unique
status of bags and the skill involved in their creation.
Current Trading and Outlook
Group revenue in the year to date is 45% ahead of last year,
with retail revenue 30% ahead due to a strong recovery in the UK,
as our stores re-opened after the third UK lockdown, and continuing
growth in Asia.
The Group started the new year with net cash of GBP11.8m and
deferred liabilities of GBP4.7m, which will unwind in the current
year. We have renewed our banking facilities with HSBC until March
2023. The cash position has been further enhanced by the sale of
the lease of our Paris store, announced on 6 July 2021, which will
add approximately GBP10.8 million to our resources.
Despite some remaining uncertainties, with the Group's ongoing
recovery from COVID-19 the Board expects the positive momentum to
continue, although sales in the current year may remain below their
pre-COVID-19 levels, in part due to the rationalisation of the
store network.
As part of the brand's 50(th) anniversary celebrations, our
series of product collaborations continued with the Priya Ahluwalia
capsule collection and the recent launch of the Mulberry x Alexa
Chung collaboration. This is an exciting update from our long-time
friend and the person who inspired one of our most iconic bags, the
Alexa.
Mulberry is an exceptional, powerful brand, with a rich heritage
in UK manufacturing, and internationally acclaimed for quality and
design. Underpinning this is a genuine desire to do the right thing
for our people, our customers, our partners and our communities, as
illustrated by the Made to Last manifesto. This year has tested us,
as it has the world, but because of our relentless focus on
delivering against our strategic goals, our agility in responding
to the situation, our market leading digital offer, our resilience
and our passion for quality that is made to last, I am delighted
and proud that we have emerged stronger, and we look to the future
with confidence.
Thierry Andretta
Chief Executive Officer
21 July 2021
Progress against our strategy
With our rich heritage in leather craftmanship and reputation
for innovation, we strive to grow the Group through our four
strategic pillars which focus on omni-channel distribution,
international development, constant innovation and a sustainable
lifecycle.
Strategic Pillar 1
Omni-channel distribution
Through our omni-channel distribution model, we aim to enhance
our customers' experience and drive engagement. This includes
developing our store network through selective store openings and
closures, the continued roll-out of the new Mulberry store concept
and further enhancements to our omni-channel approach, which allow
customers to research, buy and return product anywhere across our
stores and digital platforms. Our aim is to expand this across our
global network over the coming year.
Our new Mulberry store concept features design elements that
represent our distinctive British he ritage and enables us to
better display and promote our collections. The concept includes
innovative customer-facing technology, creates more space and
supports our omni-channel proposition. It has helped to elevate our
brand position with the new concept stores outperforming more
traditional outlets. As at the period end, the new store concept
had been implemented in 11 stores in the UK and 19 stores in
international markets and we will continue our roll-out over the
coming years. In addition in the UK we extended our omni-channel
proposition with the launch of same-day delivery in our standalone
retail stores, along with the standalone stores now having the
ability to fulfil digital orders. Over the coming year our plan is
to expand our omni-channel offer to our concession network.
In the UK we operated 45 retail stores at the period end, which
included 15 John Lewis, and 10 House of Fraser concessions. ([2])
We will continue to manage the business proactively and focus on
optimising the UK store network.
Digital sales represented 49% of Group revenue (2020: 24%). This
growth was largely driven by our customers switching to digital
channels while stores were closed during lockdown periods, along
with overall lower sales in the period, all of which were as a
result of the COVID-19 pandemic. There is also an element of
continued growth due to further enhancements in our market-leading
digital platforms including better functionality, localisation and
local fulfilment. For the coming period we expect the digital mix
to drop back to a rate of c.36% as stores reopen, however we do
expect an accelerated shift to digital/omni-channel shopping across
all regions.
Strategic Pillar 2
International Development
We are optimising our digital channels and global store network,
with a particular focus on Asia Pacific, which continues to offer a
significant growth opportunity.
Asia Pacific retail sales increased by 36%, driven by ongoing
investment in this region, with China retail sales up 81% and South
Korea retail sales up 36%. Japan, which was m ore widely impacted
by local lockdowns and restrictions saw a 9% increase in retail
sales. The investment in the Group's subsidiaries in China, South
Korea and Japan is making good progress and after several years of
heavy investment, these businesses moved into profit.
Our global pricing strategy which now applies the same retail
price globally, was implemented in April 2020 and has helped to
drive growth. We appointed a new General Manager for the North Asia
region towards the end of the period and are re-locating our team
to Shanghai (previously Hong Kong) to support growth in this key
market.
In the Rest of World we closed three locations, with the full
exit of Canada. Digital sales grew strongly in this region over the
period and in the US, we furthered our partnership with Nordstrom,
via their drop-ship model. In Europe, we opened a distribution
centre to support this business post Brexit.
[2] Store numbers include own stores and concessions operated by
Mulberry employees.
Strategic Pillar 3
Constant Innovation
During the period, we re-launched the Alexa bag, one of our most
desirable silhouettes. With new sustainable credentials, this
much-loved icon has been performing particularly well following its
global launch in November 2020. We continued to evolve our other
key families with new introductions made across Bayswater (Mini
Bayswater), Lily (Top-Handled Lily) and Iris (Iris Hobo). In March
2021, we launched the Typography Collection, a new collection
constructed using our newly introduced Eco-Scotchgrain made from
recombined Bio-Plastic materials.
Our Mini Bags range has performed particularly well, driven by
the Mini Alexa and Small Darley Satchel. Across our lifestyle
categories, eyewear and soft accessories also continued to have
strong sales.
The V&A X Mulberry collaboration was launched in December
2020, which celebrated our sponsorship of the V&A exhibition
Bags: Inside Out. The collection saw a signature print inspired by
a beautiful 20th century floral furnishing fabric held in the
museum's archive animate some of Mulberry's most iconic bag
silhouettes, creating timeless accessories steeped in design
history.
Strategic Pillar 4
Sustainable Lifecycle
Mulberry products have been 'Made to Last' from the outset and
we are committed to lifetime service for a Mulberry item. Our
world-class Repair Centre in the Rookery, one of our Somerset
factories, is a key feature in our journey towards a fully
sustainable product and service offer. Our responsible approach is
followed throughout our manufacturing processes and standards to
ensure we uphold and protect our heritage in leather craftsmanship.
We use innovative technology such as the latest digital cutting
machines, which ensure improved utilisation and reduced waste on
leather cutting.
We are proud to continue working with Zero Waste to Landfill
partners. Mulberry's contribution, made via the Carbon Balanced
fund will be invested in the long-term protection and restoration
of threatened tropical forests in Guatemala.
We aim to manufacture 50% of our bags in the UK (other
manufacturing areas include Europe and Asia) and during the period
82% of our range used leather and suede that is sourced from
environmentally accredited tanneries. Our goal is to achieve 100%
by 2022. In December 2020, we joined the Sustainable Leather
Foundation, a not-for-profit, community interest company with a
vision is to enable collective improvement and education globally,
for more sustainable practices in leather manufacturer and
production.
We continue to be a member of the Better Cotton Initiative (the
largest cotton sustainability programme in the world). Our target
is for all cotton to be sustainably sourced by 2025 - recycled,
organic or BCI. We also joined Textile Exchange's Sustainable
Cotton Challenge.
We launched Mulberry Exchange in February 2020, our circular
buyback and re-sell programme. This was further extended in March
2021 as we launched on Vestiaire Collective's Brand Approved
program, and also in April 2021 through the digital launch of
Mulberry Exchange program on mulberry.com. Items available through
Vestiaire Collective or directly through The Mulberry Exchange, are
fully authenticated and refurbished in-house by Mulberry at our
Repairs Centre in Somerset. The Mulberry Exchange offers customers
the chance to purchase pre-loved and coveted Mulberry archive
pieces, or trade in their own Mulberry bags for credit towards a
new purchase. Each bag that is returned will be given a second
lease of life: restored carefully by expert craftspeople and resold
through selected Mulberry stores and mulberry.com.
Financial review
Our results for the 52 weeks ended 27 March 2021 were materially
affected by the impact of COVID-19 on the Group and the wider
economy and the consequential effect on revenues. The impact was
mitigated to an extent by strong growth in our Asian markets, the
strength of our omni-channel business, cost actions taken in
response to COVID-19 and government support programmes.
Group revenue and gross profit
GBP Million 2020/21 2019/20 % Change
Digital 56.4 36.3 55%
Stores 43.6 89.1 -51%
Retail (omni-channel) 100.0 125.4 -20%
-------- -------- ---------
Wholesale and Franchise 15.0 23.9 -37%
-------- -------- ---------
Group Revenue 115.0 149.3 -23%
-------- -------- ---------
Digital 44.6 27.8 61%
Stores 21.6 65.2 -67%
UK 66.2 93.0 -29%
-------- -------- ---------
Digital 3.8 2.4 58%
Stores 18.0 13.6 33%
Asia Pacific 21.8 16.0 36%
-------- -------- ---------
Digital 8.0 6.1 31%
Stores 3.9 10.3 -62%
Rest of World 11.9 16.4 -27%
-------- -------- ---------
Retail (omni-channel) 100.0 125.4 -20%
-------- -------- ---------
UK 2.4 5.7 -58%
Asia Pacific 2.8 5.4 -48%
Rest of World 9.8 12.8 -23%
Wholesale and Franchise 15.0 23.9 -37%
-------- -------- ---------
At the start of the period 70% of our worldwide stores were
closed due to COVID-19, including all of our stores in the UK,
Europe and North America. Our stores in China and South Korea
re-opened in April 2020, followed by stores in Japan and Europe and
from 15 June 2020 a phased re-opening in the UK.
England entered its second lockdown on 5 November, which ended
on 2 December, but was replaced by a 3-tier system, which was
designed to keep restrictions in place for the most affected parts
of the country. This was amended on 20 December to create a
four-tier system, where non-essentials retail was forced to close
in tier 4 areas. On 5 January 2021, a third UK lockdown was imposed
across England, which resulted in the closure of all our stores in
England. These stores remained closed until 12 April 2021, which
was at the start of the new financial year.
The strength of our omni-channel business and growth in Asia
Pacific helped to offset the impact of the shutdowns in the UK,
Europe and North America. In Q1 retail sales were down 31%. We saw
an improving trend as stores re-opened with Q2 retail sales down
18%. This continued as we moved into Q3 with retail sales down 15%
in the quarter. However a number of our stores were closed again in
the final quarter of the period, which meant for Q4 our retail
stores were below prior year by 19%.
Asia Pacific sales increased by 36%, driven by ongoing
investment in this region, offset by a 27% decrease in rest of
world sales.
Wholesale and franchise sales decreased by 37%, in part due to
the continuing focus on our direct-to-customer model, but mainly
due to the impact of COVID-19 on our partners.
Gross margin for the period was 63.6% (2020: 61.0%).
Other Operating Expenses
The Group implemented a number of cost saving measures during
the period. COVID-19 has had a dramatic impact on our business and
we expect the recovery in our sales levels over the medium term to
be gradual. Our objective was to ensure that our cost base is in
line with anticipated trading levels. The cost saving actions
included a significant reduction in discretionary costs, the
freezing of pay and recruitment and a temporary 20% pay cut for PLC
directors. A reduction in employee numbers by approximately 25%
across the Group and the renegotiation or termination of leases
where possible. The Group also accessed relevant UK Government
support programmes, such as business rates relief and benefited
from lower retail depreciation resulting from the prior period
impairment charge.
These actions achieved a 32% reduction in operating expenses on
a full-year basis.
Other Operating Income
Included within other operating income is GBP4.8m (2020:
GBP0.2m) of grants receivable under HM Revenue & Customs
Coronavirus Job Retention Scheme (CJRS) and GBP0.5m from equivalent
schemes offered in other non-UK territories. As a result of the
progress that has been made, the Group has taken the decision not
to claim our entitlement to CJRS in the current period.
Profit before tax
The Group's underlying profit before tax for the period was
GBP5.9m (2020: loss before tax GBP14.2m). Adjusting items of
GBP1.3m (2020: GBP33.7m) include restructuring costs, store closure
costs (2020: credit) lease modifications and impairment charge
related to right of use assets, and property, plant and
equipment.
Taxation
The Group reported a tax credit of GBP43k (2020: GBP0.9m), an
effective rate of tax of (1%) (2020: 2%). The effective tax rate is
lower than the UK tax rate of 19%, primarily due to the use of
prior year tax losses, which were not recognised as a deferred tax
asset.
Dividends
The Board has taken the decision that no dividend will be
declared for the 52 weeks ended 27 March 2021 (2020: nil) and that
the Group's resources will be focussed on continuing the successful
investment in our international business, particularly in Asia.
Cashflow
The net increase in cash and cash equivalents per the cashflow
statement of GBP4.2m (2020: decrease of GBP4.6m) reflected the cost
actions taken to offset the decline in revenue, further working
capital benefits, including a reduction in inventory and lower
capital expenditure. The reduction in lease payments and interest
paid was in part due to the negotiation of extended payment terms
with landlords but also the renegotiation and termination of leases
where possible.
Borrowing Facilities
The Group's net cash balance (comprising cash and cash
equivalents, less overdrafts) at 27 March 2021 was GBP11.8m (2020:
GBP7.2m), with deferred liabilities of GBP4.7m (2020: GBP3.0m). Net
cash comprises cash balances of GBP11.8m (2020: GBP7.2m) less bank
borrowings of GBPnil (2020: GBPnil), which excludes loans from
related parties and non-controlling interests of GBP4.7m (2020:
GBP5.3m). Since the period end the Group has extended its revolving
credit facility with HSBC until March 2023, and renegotiated
banking covenants to reflect the ongoing COVID-19 environment. The
GBP15.0m revolving cash facility is secured, and covenants are
tested on quarterly basis and contain a net debt to EBITDA ratio,
and a fixed charge cover ratio. Covenants are tested on a "frozen
GAAP" basis and exclude the impact of IFRS16. In addition, the
Group has a GBP4.0m overdraft facility and a further USD 1.9m
overdraft facility in China, which are renewed annually.
Corporate Social Responsibility - Made To Last
"Made To Last" is the philosophy that goes to the very heart of
our business. It defines the quality standards we demand at every
stage of the sourcing and manufacturing of our products, and our
relationships with the communities around us.
Mulberry will transform our business to be a regenerative and
circular model that will encompass the entire supply chain, from
field to wardrobe, by 2030. We believe a future regenerative and
circular model will be based on six key actions for change;
1. Regenerative Agriculture & Sourcing Transparency; Pioneer
a hyper-local, hyper-transparent "farm to finished product" supply
chain model.
We are building a network of regenerative and organic farms to
supply the hides to create our leather across the UK and Europe. On
a regenerative and rotational farm livestock play an essential role
in maintaining soil health and healthy soil draws down and stores
carbon from the atmosphere.
By 2030 our entire leather supply chain will adhere to
transformative sourcing and production model. We will launch our
first "farm to finished product" British bags in 2021.
By 2022 all leather in Mulberry collections will be sourced from
Leather Working Group (LWG) accredited tanneries, and leather from
environmentally accredited tanneries is today available across 80%
of our collections.
2. Low Carbon Leather; Develop the world's lowest carbon leather
sourced from a network of environmentally conscious farms.
Leather goods are the foundation of our business and comprise
approximately 90% of our collection. We are committed to
transparency, regeneration and circularity across our leather
supply chain from farm to finished product.
We are working with farmers who are investing in regenerative
agriculture to source the hides that will product our leather and
we are also working with tanneries that are pioneers in ow impact
manufacturing and zero waste leather production.
Partners such as Scottish Leather Group source 98.6% of their
raw hides within the UK and Ireland, meaning transportation miles
are much lower, and they have their own water filtration and
recycling plant which enables them to re-use up to 40% of their
wastewater in leather production.
Across Europe, our tannery partners work with farms locally
within the EU to source hides for their leather production. We are
working with these pioneering tanneries to map and measure their
supply chains and follow traceability mechanisms from farm to
tannery.
Working with partners who source locally enables the level of
transparency required in building a future network of farms that
are invested in environmental stewardship.
3. Net Zero; Achieve net zero carbon emissions by 2035.
This commitment encompasses both the GHGs we emit directly and
those associated with our business activities, referred to as Scope
1, 2, and 3 emissions.
We are signatories of the UN Fashion Charter for Climate Action
and we are adopting a Science Based Target approach, working to set
an ambitious reduction strategy based on a 1.5 degree pathway
across Scope 1, 2, and 3.
We will continue to invest in renewable energy and nature-based
carbon offsetting solutions such as forest restoration through the
Woodland Trust and World Land Trust.
4. Repairs & Restoration; Continue to extend the life of
Mulberry products through repair and restoration.
We are passionate about extending the life of every Mulberry
product through repair, renewal, and repurposing. This commitment
is at the heart of our circular proposition, influencing the way we
design and manufacture, and the services we offer our
customers.
The Repairs Team at The Rookery, one of our Somerset factories
where we still make 50% of our bags, are masters in restoration,
breathing new life into more thank 10,000 bags every year, with
leather and hardware archives going back over 35 years.
5. Circular Economy; Buy back, resell or repurpose any Mulberry bag.
Our circular economy programme, The Mulberry Exchange was
launched in store in 2020, and on Mulberry.com in April 2021,
alongside a recently launched partnership with Vestiaire
Collective. The Mulberry Exchange enables customers to buy
pre-loved and vintage bags that have been expertly authenticated
and refurbished by the highly skilled artisans of our Somerset
repairs centre.
If the day comes that one of our bags really has reached the end
of the line, we will buy it back, and use it to power the
production of a new bag through an innovative energy reclaim system
unique to our strategic partner Muirhead, a member of the Scottish
Leather Group, ensuring that the line never ends, it just becomes a
circle.
6. Community; Extend our commitment to being a real Living Wage
employer by working with our network of suppliers to achieve the
same.
We are nothing without our people. All the actions we take are
dependent on their contribution and goodwill. For us, being net
positive is as much about the people and communities that we're a
part of as it is greenhouse gas emissions.
The baseline for us is being a real Living Wage employer and we
are extending that commitment by working with out suppliers to
achieve the goal that every person working within the Mulberry
supply chain is also paid a Living Wage, wherever that are in the
world.
We are focused on educating our workforce and building awareness
of the challenges facing women and minority groups in the work
environment and beyond. We are fostering a culture of open
discussion through our Diversity and Inclusion Committee that
supports our drive to facilitate positive change for all.
We also acknowledge that after the challenges of the past year,
team wellbeing has never been more important. We are focused
increasingly on mental health and wellbeing, and we have trained
mental health first aiders to support our employees across the
business.
Our Progress So Far;
Responsible innovation is the foundation of our creativity. We
design and make for today's lifestyles and better futures. We
believe products should be used and loved, repaired not
replaced.
Leather;
-- All leather will be sourced from environmentally accredited tanneries by Autumn/Winter 2022
-- Currently 80% of collection sourced from environmentally accredited tanneries
-- Founding partner of the Sustainable Leather Foundation, and members of LWG since 2012.
Link to key action 1, 2
Other Low Impact Materials;
-- All nylon sourced as regenerated ECONYL since Spring/Summer 2020
-- Launch of Eco Scotchgrain range in April 2021, made from recombined Bio-Plastic materials
-- Launch of sunglasses made from biodegradable and recyclable cellulose acetate in SS21
Link to key action 5
Carbon;
-- All UK operations carbon neutral since 2019
-- Working with charities such as the Woodland Trust to ensure efficient offsetting
-- Somerset factories work with Zero Waste to Landfill
providers, recovering energy from waste with cannot be reused or
recycled
-- Signatory of UN Fashion Industry Charter for Climate Action
-- In the process of mapping our carbon footprint
Link to key action 3
Product Circularity
-- Launched circular resell and buy back programme, The Mulberry Exchange in February 2020
-- Launched on Vestiaire Collective's Brand Approved program in March 2021
-- Repairs Centre restores over 10,000 bags a year
Link to key action 4, 5
Packaging;
-- Cupcycling introduced into customer packaging in January
2020, over 1.5 million coffee cups have been repurposed to make
Mulberry Green paper
-- All paper and card is FSC certified
-- All customer-facing packaging will be curb side recyclable by end of 2021
Link to key action 5
People & Community;
-- Produced over 15,000 reusable PPE gowns for frontline NHS healthcare workers in 2020
-- Raised GBP75,000 for the National Emergencies Trust in 2020
-- Worked with The Felix Project to provide over 177,000 meals
to those in need in December 2020.
-- Ongoing partnership with World Land Trust
-- Continue to manufacture over 50% of our bags in the UK and
invest in thriving apprenticeship program
Link to key action 6
GOING CONCERN
In determining whether the Group's accounts can be prepared on a
going concern basis, the Directors considered the Group's business
activities and cash requirements together with factors likely to
affect its performance and financial position, including the
current and future anticipated impact of COVID-19. The going
concern period reviews the 12-month period from the date of this
announcement to 31 July 2022.
The key judgements in relation to the going concern assessment
are in respect of the potential ongoing impact of COVID-19 on the
Group. They include the timing of the Group's recovery to
pre-COVID-19 trading levels in the UK, Europe and North America and
the likelihood and impact of further lockdowns in these regions,
including their duration and the impact on consumer demand in the
Group's markets. When making these judgements, the Directors
considered trading levels since the majority of the Group's stores
have re-opened and the outlook for the Group against their detailed
base case scenario. The Directors have also considered a reverse
stress test scenario and compared this to a reasonable worse case
downside scenario. These are described in further detail below.
The Group had net cash of GBP11.8m (2020: GBP7.2 million) and
deferred liabilities of GBP4.7m (2020: GBP3.0m) at 27 March 2021
and had not drawn down on its revolving credit facility.
Borrowing facilities
The Group has a GBP15m revolving credit facility with security
granted in favour of HSBC banking, which on 15 July 2021 was
extended for a further 12-month period to March 2023. Banking
covenants have been cautiously set to allow for further lockdowns
in the UK, Europe and North America and reduced revenue growth.
Covenants are tested on a quarterly basis and contain a net debt to
EBITDA ratio and a fixed charge cover ratio. Covenants are tested
on a 'frozen GAAP' basis and exclude the impact of IFRS 16. In
addition, the Group has a GBP4.0m overdraft facility and a further
USD1.9m overdraft facility in China, which are not committed
facilities and therefore not considered by the Directors as part of
the going concern assessment. The group overdraft is renewed
annually and the overdraft in China is renewed annually in
July.
The revolving credit facility was not drawn down at the period
end and remains undrawn at the date of this report. The Group had
net cash of GBP14.8m at 16 July 2021.
Base case scenario
The Directors' base case scenario assumes that revenues do not
recover to pre COVID-19 levels in the short term and there are no
further lockdowns in the Group's markets. The impact of COVID-19 on
the wider economy and the removal of the VAT Retail Export Scheme
in the UK will also have a consequential effect on demand. The base
case scenario assumes a 10% reduction in revenue for the financial
period ending 02 April 2022 against the financial period ending 28
March 2020 (pre-COVID-19 pandemic).
The Group is benefitting from further rates relief in the
current financial period, but no further relief or Government
support has been assumed after that point.
Under this scenario, banking covenants will be met and the
revolving credit facility remains undrawn although available to the
Group throughout the 12-month going concern period.
Reverse stress test and downside scenario
The Directors have reviewed a reverse stress test scenario that
models the decline in sales that the Group would be able to absorb
before triggering a breach of banking covenants. It should be noted
that the revolving credit facility is not forecast to be drawn down
under the reverse stress test, and therefore, despite the potential
covenant breach the revolving credit facility would not be
required. The Directors believe that this scenario is remote, for
the following reasons:
-- Trading during the first quarter of the period has been ahead
of the of the base case scenario. As demonstrated in previous
lockdowns, digital revenues are able to offset some of the lost
sales while stores are closed;
-- No further lockdowns are currently envisaged in the UK due to
the success of the UK vaccination program;
-- Revenue in this scenario is comparable with the prior period
where the Group was impacted by significant store closures for the
majority of the period; and
-- Further actions, including revenue opportunities, further
cost savings and working capital benefits are available.
The reverse stress test assumes a 20% reduction in revenue
against the base case scenario, offset by working capital
optimisation, capex savings and a 23% reduction in discretionary
costs (marketing, consumables, travel and other goods not for
resale). Inventory production and purchases have been reduced in
line with the anticipated demand under this scenario.
Under this scenario, the revolving credit facility remains
undrawn although available to the Group throughout the 12-month
going concern period, however, the fixed charge cover covenant
would be breached in May 2022. Whilst the Directors believe that
this scenario is remote, it would allow time for further actions to
be taken, including a possible further relaxation of banking
covenants. Whilst there is no guarantee that this will be agreed,
the Group currently maintains a good relationship with their
lender.
The Directors have considered a plausible but remote downside
scenario where the UK, Europe and North America experience a
4-month lockdown between October 2021 and January 2022. This
scenario assumes an uplift in digital sales while the stores are
closed in line with previous trends. No lockdown is assumed in
Asia, as early containment measures have proved effective in
curbing the pandemic. The impact of this would result in a 7%
reduction in Group revenue between October 2021 and January 2022
against the base case scenario.
Going concern basis
Based on the assessment outlined above, the Directors have a
reasonable expectation that the Group has access to adequate
resources to enable it to continue to operate as a going concern
for the foreseeable future. For these reasons, the Directors
consider it appropriate for the Group to continue to adopt the
going concern basis of accounting in preparing the Annual Report
and financial statements.
Group income statement
52 WEEKSED 27 MARCH 2021
52 weeks 52 weeks
ended ended
27 March 28 March
2021 2020
GBP'000 GBP'000
Revenue 114,951 149,321
Cost of sales (41,879) (58,203)
--------- ---------
Gross profit 73,072 91,118
Impairment charge related to property, plant
and equipment (590) (7,143)
Impairment charge related to right of use
assets (5,725) (24,947)
Store closure credit/(expense) 3,702 (886)
Lease modification 3,951 -
Other operating expenses (71,638) (102,255)
Other operating income 6,006 1,093
--------- ---------
Operating profit/(loss) 8,778 (43,020)
Share of results of associates (60) 49
Finance income 12 83
Finance expense (4,176) (4,978)
--------- ---------
Profit/(loss) before tax 4,554 (47,866)
Tax 43 998
--------- ---------
Profit/(loss) for the period 4,597 (46,868)
--------- ---------
Attributable to:
Equity holders of the parent 4,773 (44,136)
Non-controlling interests (176) (2,732)
--------- ---------
Profit/(loss) for the period 4,597 (46,868)
--------- ---------
Basic profit/(loss) per share 7.7p (78.9p)
Diluted profit/(loss) per share 7.7p (78.9p)
All activities arise from continuing operations.
Group statement of comprehensive income
52 WEEKSED 27 MARCH 2021
52 weeks 52 weeks
ended ended
27 March 28 March
2021 2020
GBP'000 GBP'000
Profit/(loss) for the period 4,597 (46,868)
Items that may be reclassified subsequently to
profit or loss
Exchange differences on translation of foreign
operations (49) 608
Gain on cash flow hedges - 123
Income tax relating to items that may be classified
subsequently to profit or loss - (129)
Total comprehensive income/(expense) for the period 4,548 (46,266)
--------- ---------
Attributable to:
Equity holders of the parent 4,294 (43,291)
Non-controlling interests 254 (2,975)
--------- ---------
Total comprehensive income/(expense) for the period 4,548 (46,266)
--------- ---------
Group balance sheet
AS AT 27 MARCH 2021
27 March 28 March
2021 2020
GBP'000 GBP'000
Non-current assets
Intangible assets 14,965 14,701
Property, plant and equipment 13,608 16,953
Right of use assets 33,511 45,920
Interests in associates 134 187
Deferred tax asset 1,234 1,488
--------- ---------------
63,452 79,249
--------- ---------------
Current assets
Inventories 31,476 34,853
Trade and other receivables 12,609 11,075
Current tax asset 525 420
Cash and cash equivalents 11,820 7,998
--------- ---------------
56,430 54,346
--------- ---------------
Total assets 119,882 133,595
--------- ---------------
Current liabilities
Trade and other payables (22,629) (21,955)
Lease liabilities (14,820) (15,329)
Borrowings - (3,424)
--------- ---------------
(37,449) (40,708)
--------- ---------------
Net current assets 18,981 13,638
--------- ---------------
Non-current liabilities
Lease liabilities (59,054) (76,775)
Borrowings (4,673) (2,591)
--------- ---------------
(63,727) (79,366)
Total liabilities (101,176) (120,074)
--------- ---------------
Net assets 18,706 13,521
--------- ---------------
Equity
Share capital 3,004 3,004
Share premium account 12,160 12,160
Own share reserve (1,277) (1,061)
Capital redemption reserve 154 154
Foreign exchange reserve 1,274 1,323
Retained earnings 6,957 1,761
Equity attributable to holders of the parent 22,272 17,341
Non-controlling interests (3,566) (3,820)
--------- ---------------
Total equity 18,706 13,521
--------- ---------------
Group statement of changes in equity
52 WEEKSED 27 MARCH 2021
Cash
Share Own Capital flow Foreign
Share premium share redemption hedge exchange Retained Non-controlling Total
capital account reserve reserve reserve reserve earnings Total interests equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at
30 March 2019 3,002 12,072 (1,378) 154 (100) 821 67,555 82,126 (1,419) 80,707
Impairment
on IFRS 16
transition - - - - - - (17,770) (17,770) - (17,770)
Loss for the
period - - - - - - (44,136) (44,136) (2,732) (46,868)
Other
comprehensive
income/(expense)
for the period - - - - 100 745 - 845 (243) 602
Total
comprehensive
income/(expense)
for the period - - - - 100 745 (44,136) (43,291) (2,975) (46,266)
Issue of share
capital 2 88 - - - - - 90 - 90
Credit for
employee
share-based
payments - - - - - - (24) (24) - (24)
Impairment
of shares
in trust - - 317 - - - (317) - - -
Non-controlling
interest foreign
exchange - - - - - (243) - (243) - (243)
Adjustment
arising from
movement in
non-controlling
interests - - - - - - (574) (574) 574 -
Dividends
paid - - - - - - (2,973) (2,973) - (2,973)
------------ -------------- ----------- ------------ ------------ ----------- ------------ -------- ---------------- --------
Balance at
28 March 2020 3,004 12,160 (1,061) 154 - 1,323 1,761 17,341 (3,820) 13,521
------------ -------------- ----------- ------------ ------------ ----------- ------------ -------- ---------------- --------
Profit/(loss)
for the period - - - - - - 4,773 4,773 (176) 4,597
Other
comprehensive
(expense)/income
for the period - - - - - (479) - (479) 430 (49)
Total
comprehensive
(expense)/income
for the period - - - - - (479) 4,773 4,294 254 4,548
Charge for
employee
share-based
payments - - - - - - 105 105 - 105
Own shares - - 101 - - - 5 106 - 106
Exercise of
share options - - - - - - (4) (4) - (4)
Release of
impairment
of shares
in trust - - (317) - - - 317 - - -
Non-controlling
interest foreign
exchange - - - - - 430 - 430 - 430
Balance at
27 March 2021 3,004 12,160 (1,277) 154 - 1,274 6,957 22,272 (3,566) 18,706
------------ -------------- ----------- ------------ ------------ ----------- ------------ -------- ---------------- --------
Group cash flow statement
52 WEEKSED 27 MARCH 2021
52 weeks 52 weeks
ended ended
27 March 28 March
2021 2020
GBP'000 GBP'000
Operating profit/(loss) for the period 8,778 (43,020)
Adjustments for:
Depreciation and impairment of property, plant
and equipment 4,777 13,627
Depreciation and impairment of right of use
assets 13,245 41,551
Amortisation of intangible assets 1,476 1,165
Gain on lease modifications and disposals (10,314) -
Loss/(profit) on sale of property, plant and
equipment 188 (16)
Own shares transferred from trust 106 -
Share-based payments (expense)/ credit 105 (24)
--------- ---------
Operating cash inflows
before movements in working capital 18,361 13,283
Decrease in inventories 3,420 5,006
(Increase)/decrease in receivables (1,534) 1,560
Increase in payables 75 1,848
--------- ---------
Cash generated from operations 20,322 21,697
Income taxes received 201 1,847
Interest paid (3,960) (4,978)
--------- ---------
Net cash inflow from operating activities 16,563 18,566
--------- ---------
Investing activities:
Interest received and gains on foreign exchange
contracts 12 83
Purchases of property, plant and equipment (1,895) (5,121)
Proceeds from disposal of property, plant and
equipment 26 39
Acquisition of intangible assets (2,233) (1,728)
Net cash used in investing activities (4,090) (6,727)
--------- ---------
Financing activities:
Dividends paid - (2,973)
Proceeds on issue of shares - 2
Increase in loans from non-controlling interests 167 783
Increase in loans from related parties - 1,707
Repayment of loans from non-controlling interests - (1,090)
Repayment of borrowings (750) (566)
Principle elements of lease payments (7,735) (14,257)
Settlement of share awards (4) -
--------- ---------
Net cash used in financing activities (8,322) (16,394)
--------- ---------
Net increase/(decrease) in cash and cash equivalents 4,151 (4,555)
--------- ---------
Cash and cash equivalents at beginning of period 7,998 12,377
Effect of foreign exchange rate changes (329) 176
--------- ---------
Cash and cash equivalents at end of period 11,820 7,998
--------- ---------
Cash and cash equivalents comprise cash and short-term bank
deposits with an original maturity of three months or less. The
carrying amount of these assets at the end of the reporting period
as shown in the consolidated statement of cash flows can be
reconciled to the related items in the Consolidated balance sheet
position as shown above. Cash and cash equivalents does not include
bank overdrafts that are not integral to the cash management of the
group.
SELECTED NOTES TO THE GROUP FINANCIAL STATEMENTS
1. BASIS OF PREPARATION
Mulberry Group plc, a Public Limited Company limited by shares
listed on AIM ("the Company"), is incorporated and domiciled in
England, United Kingdom. The Company acts as the holding company of
the Group. The Company's registration number is 01180514.
The financial information set out in this document does not
constitute the Group's statutory accounts for the 52 weeks ended 27
March 2021 or for the 52 weeks ended 28 March 2020.
Statutory accounts for the 52 weeks ended 28 March 2020 have
been delivered to the Registrar of Companies and those for the 52
weeks ended 27 March 2021 have been approved and will be delivered
to the Registrar of Companies following the Company's 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.
The financial statements and announcement for the period ended
27 March 2021 were approved and authorised for issue by the Board
of Directors on 20 July 2021.
2. SIGNIFICANT ACCOUNTING POLICIES
Basis of accounting
The financial statements have been prepared in accordance with
International Accounting Standards in conformity with the
requirements of the Companies Act 2006.
For the period ended 27 March 2021, the financial period runs
for the 52 weeks to 27 March 2021 (2020: 52 weeks ended 28 March
2020).
The financial statements are prepared under the historical cost
basis except for financial instruments that are measured at fair
values at the end of each reporting period as explained in the
accounting policies below. The principal accounting policies
adopted are set out below.
Going concern
The Directors have, at the time of approving the financial
statements, a reasonable expectation that the Company and the Group
have adequate resources to continue in operational existence for
the foreseeable future. As a result, they continue to adopt the
going concern basis of accounting in preparing the financial
statements.
3. BUSINESS AND GEOGRAPHICAL SEGMENTS
IFRS 8 requires operating segments to be identified on the basis
of internal reports about components of the Group that are
regularly reviewed by the Chief Operating Decision Maker, defined
as the Board of Directors, to allocate resources to the segments
and to assess their performance. Inter-segment pricing is
determined on an arm's length basis. The Group also presents
analysis by geographical destination and product categories.
(a) Business segment
The Group has identified one reportable segment.
The principal activities are as follows:
The accounting policies of the reportable segment are the same
as described in the Group's financial statements. Information
regarding the results of the reportable segment is included below.
The distribution of product globally is monitored and optimised at
a Group level and effected via the Group's distribution centres in
the UK, Europe, North America and Asia. Performance for the segment
is assessed based on operating profit/(loss).
The Group designs, manufactures and manages the Mulberry brand
for the segment and therefore the finance income and expense are
attributable to this segment.
Group income statement
52 weeks 52 weeks
ended ended
27 March 28 March
2021 2020
GBP'000 GBP'000
Revenue
Retail 43,586 89,167
Digital 56,365 36,242
Wholesale 15,000 23,912
--------- ---------
Total revenue 114,951 149,321
Cost of sales (41,879) (58,203)
--------- ---------
Gross profit 73,072 91,118
Impairment charge related to property, plant
and equipment (590) (7,143)
Impairment charge related to right of use assets (5,725) (24,947)
Store closure credit/(expense) 3,702 (886)
Lease modification 3,951 -
Operating expenses (71,638) (102,255)
Other operating income 6,006 1,093
--------- ---------
Operating profit/(loss) 8,778 (43,020)
Share of results of associates (60) 49
Finance income 12 83
Finance expense (4,176) (4,978)
--------- ---------
Profit/(loss) before tax 4,554 (47,866)
Tax 43 998
--------- ---------
Profit/(loss) for the period 4,597 (46,868)
Segment capital expenditure 3,996 6,401
Segment depreciation and amortisation* 19,498 56,343
Segment assets* 118,648 131,863
Segment liabilities 101,176 120,074
'* The prior year numbers were restated to
reflect the correct disclosure presentation.
For the purposes of monitoring the segment performance and
allocating resources the Chief Operating Decision Maker, which is
deemed to be the Board, monitors the tangible, intangible and
financial assets. All assets are allocated to the reportable
segment.
(b) Geographical markets
Sales revenue Non-current assets
by by
geographical market(1) geographical market
52 weeks 52 weeks
ended ended
27 March 28 March 27 March 28 March
2021 2020 2021 2020
GBP'000 GBP'000 GBP'000 GBP'000
UK 68,573 98,813 50,792 65,449
Rest of Europe 15,014 19,584 8,487 9,749
Asia 24,636 21,407 3,362 3,259
North America 6,261 9,038 811 792
Rest of world 467 479 - -
------------ ----------- ---------- ----------
Total revenue 114,951 149,321 63,452 79,249
------------ ----------- ---------- ----------
(1) Revenue by geographical market includes wholesale and
digital sales based on the location of the customer.
(c) Product categories
Leather accessories account for over 90% of the Group's
revenues, of which bags represent over 70% of revenues. Other
important product categories include small leather goods, shoes,
soft accessories and women's ready-to-wear. Net asset information
is not allocated by product category.
4. ALTERNATIVE PERFORMANCE MEASURES
A reconciliation of reported loss before tax to underlying
profit/(loss) before tax is set out below;
52 weeks 52 weeks
ended ended
27 March 28 March
Reconciliation to underlying profit/(loss) 2021 2020
before tax: GBP'000 GBP'000
Profit/(loss) before tax 4,554 (47,866)
Restructuring costs 2,370 676
Store closure (credit)/costs (3,702) 886
Impairment charge related to property, plant
and equipment 590 7,143
Impairment charge related to right of use
assets 5,725 24,947
Lease modification (3,951) -
Licence agreement exit costs 300 -
Underlying profit/(loss) before tax - non-GAAP
measure 5,886 (14,214)
Adjusted basic earnings/(loss) per share 10.5p (22.4p)
Adjusted diluted earnings/(loss) per share 10.5p (22.4p)
In reporting financial information, the Group presents
Alternative Performance Measures ("APMs"), which are not defined or
specified under the requirements of IFRS. The Group believes that
these APMs, which are not considered to be a substitute for, or
superior to, IFRS measures, provide stakeholders with additional
helpful information on the performance of the business. These APMs
are consistent with how the business performance is planned and
reported within the internal management reporting to the Board of
Directors. Some of these measures are also used for the purpose of
setting remuneration targets. The Group makes certain adjustments
to the statutory profit or loss measures in order to derive APMs.
Adjusting items are those items which, in the opinion of the
directors, should be excluded in order to provide a consistent and
comparable view of the performance of the Group's ongoing business.
Generally, this will include those items that are largely one-off
and material in nature as well as income or expenses relating to
acquisitions or disposals of businesses or other transactions of a
similar nature. Treatment as an adjusting item provides
stakeholders with additional useful information to assess the
year-on-year trading performance of the Group.
Restructuring costs
During the period, one-off charges of GBP2,370,000 (2020:
GBP676,000) were incurred relating to people restructuring
costs.
Store closure costs
During the period, two UK and two international stores were
closed (2020: one international store) which had not been trading
in line with expectations. The stores closure credit relates to the
release to the Income Statement of lease liabilities net of lease
exit and redundancy costs. The right of use and tangible assets for
these stores had been fully impaired in the 52 weeks ended March
2020.
Impairment charge related to property, plant and equipment and
right of use assets
The fixed assets and right of use assets of retail stores are
subject to impairment based on whether current or future events and
conditions suggest that their recoverable amount may be less than
their carrying value. The recoverable amount of each store is based
on the higher of the value in use and fair value less costs to
dispose. Value in use is calculated from expected future cash flows
using suitable discount rates, management assumptions and estimates
on future performance. The carrying value for each store is
considered net of the carrying value of any cash contribution
received in relation to that store. For impairment testing
purposes, the Group has determined that each store is a separate
cash-generating unit (CGU). Each CGU is tested for impairment if
any indicators of impairment have been identified. The value in use
of each CGU is calculated based on the Group's latest budget and
forecast cash flows. Cash flows are discounted using the weighted
average cost of capital ("WACC") and are modelled for each store
through to their lease expiry or break date. No lease extensions
have been assumed when forecasting. As a result of this assessment
impairment charges of GBP590,000 (2020: GBP7,143,000) and
GBP5,725,000 (2020: GBP24,947,000) were recognised in the period
against the property, plant and equipment and right of use assets
respectively for the stores which are impaired.
Lease modification
During the period the Group renegotiated a lease that had 14
years remaining to one where only 9 years remain as at March 2021.
The resulting reduction in the lease liability was treated as an
IFRS 16 lease modification. The resulting remeasurement of the
lease liability was in excess of the right of use asset and
resulted in a credit of GBP3,951,000 (2020: GBPnil) to the Income
Statement.
Licence agreement exit costs
During the period the Group incurred charges of GBP300,000
(2020: GBPnil) from the write-off of its ready-to-wear and footwear
licence relating to final samples and materials on non-renewal of
the licence and distribution agreement for these lifestyle
products.
5. OTHER OPERATING EXPENSES
52 weeks 52 weeks
ended ended
27 March 28 March
2021 2020
GBP'000 GBP'000
Other operating expenses have been arrived at after
charging/(crediting):
Net foreign exchange gain/(loss) 388 (796)
Amortisation of intangible assets 1,476 1,165
Depreciation of property, plant and equipment 4,187 6,484
Depreciation of right of use assets 7,520 16,604
Staff costs 36,330 44,418
Restructuring costs 2,370 676
Loss/(profit) on disposal of property, plant and equipment
and right of use assets 188 (16)
Bad debt expense/(credit) (592) 506
Other operating expenses 19,771 33,214
--------- ---------
71,638 102,255
6. DIVIDENDS
52 weeks 52 weeks
ended ended
27 March 28 March
2021 2020
GBP'000 GBP'000
Dividend for the period ended 28 March 2020 of nil
(2019: 5p) per share - 2,973
--------- ---------
Proposed dividend for the period ended 27 March 2021
of nil per share (2020: nil) - -
--------- ---------
7. EARNINGS PER SHARE ('EPS')
52 weeks 52 weeks
ended ended
27 March 28 March
2021 2020
pence pence
Basic loss per share 7.7 (78.9)
Diluted loss per share 7.7 (78.9)
Underlying basic earnings/(loss) per share 10.5 (22.4)
Underlying diluted earnings/(loss) per share 10.5 (22.4)
Earnings per share is calculated based on the following
data:
52 weeks 52 weeks
ended ended
27 March 28 March
2021 2020
GBP'000 GBP'000
Profit/(loss) for the period for basic and diluted earnings
per share 4,597 (46,868)
Adjusting items:
Restructuring costs* 1,931 584
Store closure credit/(costs)* (3,611) 886
Impairment relating to retail assets 590 7,143
Impairment charge related to right of use assets 5,725 24,947
Lease modification* (3,200) -
Licence agreement exit costs* 243 -
Profit/(loss) for the period for underlying basic and
diluted earnings per share 6,275 (13,308)
--------- ---------
*These items are included net of GBP346,000 (2020: GBP92,000
credit) of the corresponding tax expense.
52 weeks 52 weeks
ended ended
27 March 28 March
2021 2020
Million Million
Weighted average number of ordinary shares for the
purpose of basic EPS 59.5 59.4
Effect of dilutive potential ordinary shares: share
options - -
Weighted average number of ordinary shares for the
purpose of diluted EPS 59.5 59.4
--------- ---------
The weighted average number of ordinary shares in issue during
the period excludes those held by the Mulberry Group plc Employee
Share Trust.
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END
FR DKDBPDBKKAOB
(END) Dow Jones Newswires
July 21, 2021 02:00 ET (06:00 GMT)
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