Mulberry turnaround bearing fruit as new bags help sales surge by 18%

Mulberry's shares experienced a significant surge of over 7% on Monday following the British lifestyle brand's announcement that first-half sales had climbed by 18%. This growth was primarily fueled by robust full-price demand. The earnings forecast for the 26 weeks leading up to September 26 aligned with the company's board expectations, with sales increasing by 18.1% at actual exchange rates and 18.2% at constant currency.

The United States saw the most substantial growth, with sales rising by 28% and like-for-like sales up by 34%. Europe, excluding the UK, expanded by 23%, while the UK itself saw a 10% increase. Asia-Pacific sales grew by 5%, although like-for-like sales in this region surged by 24%. Franchise and wholesale sales surged by 52%, accounting for 17% of the total revenue.

Mulberry avoided discounting strategies, which contributed to a 300 basis points lower promotional sales figure compared to the same period last year, thereby bolstering gross margins. The introduction of new products like the Raffia, Crochet, Stevie, and Darley Camera Bag lines, along with iconic items such as the Bayswater and Lily, played a crucial role in driving demand.

The brand's visibility was also enhanced by its Mulberry by Christopher Kane runway show at London Fashion Week, a factor that boosted sales in the United States due to the Bloomingdale’s Marketplace launch and an expanded wholesale presence.

Looking ahead, Mulberry aims to achieve annual revenue exceeding £200 million and an adjusted EBIT margin of 15% in the medium term. Chief Executive Andrea Baldo expressed satisfaction with the progress made during the first half of the fiscal year, particularly highlighting the encouraging growth in full-price sales. The company's full first-half results are scheduled for reporting on November 19.