Mulberry FY sales up 4 percent, but investment costs hit profits

British luxury label Mulberry has reported a 4 percent increase in sales but narrowing losses in its preliminary full-year results.

The handbag maker made revenue of 159.1 million pounds in the year to April 1 compared to 152.4 million pounds a year earlier “despite macroeconomic uncertainty”.

In its domestic market of the UK, retail sales fell by around 1 percent to 87.7 million pounds, with the company noting that it was hit in the first half of the year by “the broader economic environment”, but its performance improved in the second half.

It said the government’s controversial decision to scrap VAT-free shopping for overseas shoppers impacted domestic sales for the year.

Retail sales in Asia Pacific increased 3 percent to 28.9 million pounds despite lockdown restrictions impacting the region, particularly in China and South Korea. International retail sales fell 12 percent to 46.5 million pounds.

Digital sales increased 2 percent to 48.4 million pounds and represented 30 percent of total revenue.

“We have delivered a positive group performance this year thanks to our unique brand identity, beautiful innovative products and market-leading omni-channel proposition,” CEO Thierry Andretta said in a statement.

Profits hit by investment costs

Despite the revenue increase, Mulberry’s pre-tax profit narrowed to 13.2 million pounds from 21.3 million pounds a year earlier, with the company citing Software as a Service (SaaS) costs and additional investments.

Andretta continued: “We have made significant investments in the company this year, as well as expanding our direct-to-customer model with the recent acquisitions of businesses in Sweden and Australia.

“I am also delighted today to announce we now have full ownership of Mulberry Japan Co. Limited.”

Looking at more recent trading, group revenue for the first 12 weeks of the current year is 6 percent above the prior year, while retail revenue is up 15 percent.

Mulberry added that its newly acquired Sweden and Australia stores are “continuing to perform well”.