UK's Mulberry cuts H1 loss as margin strengthens despite revenue dip

Retail and digital (omni-channel) revenue declined 8 per cent to £46.6 million, with overall like-for-like Retail and Digital revenue down 2 per cent. Within retail stores, both full-price and off-price like-for-like revenue increased 4 per cent across key markets in the UK, Europe and US, with positive momentum building since the second quarter.

Franchise and wholesale revenue rose 36 per cent to £7.3 million, driven by new UK wholesale partnerships with John Lewis, Liberty and Harvey Nichols, in line with the strategic emphasis on strengthening wholesale, Mulberry said in a press release.

Region-wise, UK omni-channel revenue fell 10 per cent to £28.1 million, with store sales down 7 per cent and digital down 16 per cent, reflecting non-profitable store closures and reduced online promotions. Off-price sales grew ahead of full-price, supported by improved inventory management, while full-price stores benefitted from a new retail incentive scheme.

Europe omni-channel revenue increased 13 per cent to £6 million, led by strong performance in Ireland, which grew 25 per cent.

US omni-channel revenue slipped 4 per cent to £4.7 million. Store sales increased 2 per cent, while digital sales declined 6 per cent, largely due to digital concessions in the US which grew 5 per cent year on year.

Asia Pacific omni-channel revenue decreased 17 per cent to £7.7 million, with digital sales down 6 per cent and store sales down 20 per cent. The region saw double-digit revenue decline, impacted by macroeconomic conditions and the closure of unprofitable stores.

The group revenue fell 15 per cent in the first quarter but returned to growth in the second quarter, rising 10 per cent. Retail omni-channel revenue was down 16 per cent in Q1 and up 1 per cent in Q2, with wholesale phasing also affecting the split.

The improved sales mix and tighter inventory management lifted gross margin to 69.2 per cent, keeping gross profit flat at £37.3 million despite lower revenue.

Operating expenses decreased 16 per cent to £42.7 million, reflecting the cost base review undertaken in FY25 and continued operational discipline. Underlying operating expenses fell 13 per cent to £42.9 million, with reductions across staff costs, systems and communications and depreciation.

Mulberry reported an operating cash inflow of £0.2 million in the period, before movements in working capital. A net working capital outflow of £4.8 million, largely due to a £4.9 million increase in inventories to rebuild stock cover on core lines, resulted in net cash used in operating activities of £4.6 million.

Net cash used in investing activities was minimal at £0.1 million, reflecting lower capital expenditure on property, plant, equipment and intangibles. Overall, cash and cash equivalents decreased by £1.0 million to £7.2 million at period end.

Net debt, excluding loans from minority shareholders, increased to £21.6 million, comprising cash of £7.2 million, bank borrowings of £9.5 million and a £19.3 million convertible loan note. Lease liabilities reduced to £32.6 million following regular payments and store closures.

Operationally, the group continued to optimise its store network, closing six loss-making stores in Asia and expanding its wholesale presence in the UK through new partners. A new retail incentive scheme contributed to improved store performance, with European stores increasing revenue by 11 per cent and UK stores by 10 per cent on a like-for-like basis, added the release.

“This has been an encouraging first half as we continue to deliver our ‘Back to the Mulberry Spirit’ strategy. We're still early in the turnaround, but the foundations we've put in place are working, and we're starting to see that reflected in performance,” said Andrea Baldo, chief executive officer (CEO) at Mulberry Group. “We're strengthening our margin and improved our cash position through a greater focus on full-price sales and disciplined cost management, while our refreshed product offer and creative direction are reconnecting the brand with customers. The strong response to new icons the Roxanne and Hackney shows that Mulberry's distinctive spirit continues to resonate.”

“While we remain mindful of the wider trading environment, current momentum gives us confidence as we enter the key festive trading period. We're focused on maintaining this progress and continuing to build a stronger, resilient business for the long term,” added Baldo.

ALCHEMPro News Desk (SG)