Mulberry Group posted an underlying, pre-tax loss of 14.2 million pounds due to the impact of COVID-19 in fiscal 2020, although trading in the current year has begun to perk up.
The underlying figure compares with a profit last year of 1 million pounds. Due to a series of new accounting measures, Mulberry reported an actual pre-tax loss of 47.9 million pounds in 2020, compared with 5 million pounds in the corresponding period last year.
Revenue in the 52 weeks to March 28 fell 10.2% to 149.3 million pounds.
The company added that it was already wrestling with a “challenging U.K. market” even before COVID-19 hit, with local sales down 6% before the pandemic struck.
During the 12-month period, international retail sales were up 4%, while in Asia-Pacific they rose 30%.
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Mulberry said the increase in reported losses in the period were due in large part to the expected impact of COVID-19 on future trading at its Bond Street store.
As reported, the company, like so many others in Britain, was forced to lay off staff due to the impact of the virus on demand. In the current fiscal year, it also shut down some manufacturing and terminated its license for footwear and apparel as part of an overarching restructuring plan.
Thierry Andretta, Mulberry’s chief executive officer, said the company had faced the most challenging market conditions in its history but has still managed to make some strategic and operational progress.
“Prior to the impact of the coronavirus pandemic, we were performing well and on track to record a pre-tax profit in the second half of the year. This was due to progressing our four-pillar growth strategy: Our omni-channel distribution, international development in Asia, a drive for constant innovation and sustainability.”
He said that the group had reacted swiftly to the impact of COVID-19, managing capital and reducing costs to ensure it was able to maintain a “robust” liquidity position. The company also made PPE for NHS hospitals.
At the end of fiscal 2020, the group had net cash of 7.2 million pounds, compared with the previous year’s 11.1 million pounds, reflecting the increased operating loss, offset by lower working capital and capital expenditure.
It has decided not to pay a full-year dividend in order to maintain its liquidity.
The company said that since the new fiscal year began six months ago, and with the easing of lockdowns in the U.K. and elsewhere, initial sales are ahead of its early expectations.
Group revenue was down 29% for the 26 weeks from 29 March to 26 September 2020, compared to the same period last year, with an improving trend since stores have reopened.
“However, we cannot escape the reality that British luxury and U.K. cities face a very uncertain future, hampered by necessary, but dramatic, social distancing measures and alarmingly low levels of footfall, as well as the pressures of high rents and business (taxes) and the upcoming changes to tax free shopping,” said Andretta.
As reported, the British government plans to do away with tax-free shopping altogether, a decision that has rocked high-end British retailers reliant on sales to tourists from around the world.
“We cannot control external events, but we have a clear strategy and remain confident in the strength of the Mulberry brand,” Andretta added.
This story was reported by WWD and originally appeared on WWD.com.