Wholesale dip holds Mulberry back
24/10/2012
Total revenue increased by 6% compared to the same period in 2011 to reach £76.5 million, with revenues from its own stores contributing £46.5 million of the total, an increase of 13%. However, wholesale shipments of Mulberry products brought in £30 million over the six-month period, which represents a drop of 4%.
Retail sales in the brand’s home market, the UK, were up by 10%. International retail sales increased by 41%, but Mulberry said this figure had fallen short of its expectations for the first half of the year. “We remain confident in our international expansion strategy,” it said in a statement, “and have recently opened stores in San Francisco, Washington DC, Berlin and Frankfurt Airport.”
The decline in wholesale revenues reflects three factors, Mulberry said in the statement. It has made a strategic decision to “rationalise certain international wholesale accounts” to improve the quality of its distribution network. There is also “a more challenging external environment in Asia”, resulting in “cautious ordering” by franchise partners there. Finally, it said comparisons with the first half of 2011 were “tough” because of the restocking of the wholesale channel last year.
Primarily due to lower wholesale revenue, Mulberry now expects group revenue growth for the year to March 31, 2013 to be below market expectations.
Chief executive, Bruno Guillon, commented: “Mulberry’s core UK retail business and key wholesale accounts continue to perform well in the context of a more challenging external environment. Although international retail sales are behind expectations, newly opened stores are performing satisfactorily and we are on track to open our target of 15-20 stores during 2012-13. The steps we have taken to improve the quality of Mulberry’s distribution network in both the retail and wholesale channels will result in the short term slowing of sales growth. However, we firmly believe these steps are in the long-term interests of building Mulberry into a global luxury brand. We continue to focus on creativity, craftsmanship and quality and in this context will start the construction of our second UK factory within the next few weeks.”
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