Mulberry hit by downturn in luxury spending

1st May 2024 09:31

(Sharecast News) - Luxury handbag maker Mulberry struck a cautious tone on Wednesday as it reported a drop in full-year revenues, pointing to a downturn in luxury spending.

In an update for the year to the end of March, the company said group revenue declined 4% on the prior year, "against a backdrop of challenging macro-economic conditions and a decline in luxury consumer spending, especially in the last quarter".

Mulberry said gross margins were maintained around those reported for the first half of the year.

"As previously highlighted, losses for the full year will be impacted by the additional operational costs of new stores in Sweden and Australia and ongoing important investments, including technology, supporting future growth of the group," it said.

Retail sales were up 0.3%, with international up 7.2% but UK sales down 3.2%.

Mulberry said retail sales were in line with the prior year, driven by growth in Europe and the US due to increased brand awareness and its direct to customer strategy. However, this was offset by a drop in the UK and Asia Pacific (excluding Australia), which continued to be challenging due to the macro-economic climate in China and reduced footfall across the region.

Chief executive Thierry Andretta said: "While we achieved positive revenue growth in the first half, Mulberry has not been immune to the broader downturn in luxury spending experienced in recent months, particularly in the UK and Asia. This decline was partially offset by positive trading in the US, where we have benefitted from increased brand awareness.

"Looking ahead, the trading environment in the UK and China remains challenging and we do not expect this to change in the short term. We are therefore managing the business prudently, focusing on executing our strategy and vision to become a global sustainable luxury brand."