Mulberry sales bounce back on China reopening
Mulberry sales are bouncing back as China’s reopening continues to boost the luxury market
- Mulberry Group had suffered a loss in the first half due to weaker UK trade
- China’s reopening has helped Mulberry and other luxury brands improve
The Mulberry Group’s sales improved in the second half of the fiscal year, partly due to strong growth in demand for luxury goods as the Chinese economy reopened.
The group, known for its luxury handbags, slumped at a loss in the first half of the year following a slump in digital purchases in Britain amid a deteriorating retail environment.
But Mulberry told investors in an update on Thursday ahead of its results for the year to April 1 that profitability was “second-half weighted” with revenues “slightly higher than last year.”
Mulberry Group is known for its luxury handbags
Mulberry said: “The group has seen an improvement in retail sales in the second half compared to the first half of the year, driven by a good performance in the UK and an improving environment in China in recent months, supported by our direct- to- – customer model.’
Luxury brands such as LVMH and Burberry have reported huge demand in recent months following the resurgence of Chinese consumers following strict lockdowns in the country.
Mulberry told investors it had continued to invest in the Asia Pacific and Greater China regions in the second half.
eToro’s Ben Laidler said: “The Chinese economy is reopening strongly after three years of Covid lockdown. This is an important compensation for the slowing economies in the rest of the world and a major boost for many UK and European companies.
“The rebounding Chinese consumer has driven the continued outperformance of the European luxury goods sector.”
In terms of other strategic developments, Mulberry said it had been able to maintain gross margins thanks to its focus on full-price sales, while also continuing to invest in “sustainable innovation” and new stores in Australia.
It added: ‘The group continued to invest in its global brand awareness and business model development during FY23 and remains focused on investments for future growth.’
According to Mulberry, net cash flow on April 1 was about £800,000, “with even more room available” under the group’s loan facilities.
Mulberry Group Shares jumped 8 percent to 243 pence by midday, bringing losses to 17.6 percent in a year.
Thierry Andretta, chief executive, said: ‘This year we continued to deliver on our strategic objectives and demonstrated resilience in the challenging macroeconomic environment.
“We invested in our omnichannel approach, improved our direct-to-customer model and maintained gross margin.”