Mulberry widens interim losses but sees global markets lift overall sales

● Retailer expanding overseas, especially in Asia, in face of ‘uncertain’ UK market

Luxury handbag manufacturer Mulberry has unveiled deepening interim losses but said robust overseas demand and tourist spending is helping compensate for a UK slowdown.

Mulberry, whose store network includes one outlet in Edinburgh and two in Glasgow, sank £609,000 into the red in the six months to 30 September, compared with a loss of £515,000 a year earlier. Same-floorspace sales were off 1 per cent.

Thierry Andretta, group chief executive, branded the UK market as “uncertain”, with domestic sales falling 1 per cent despite a boost from overseas shoppers taking advantage of the weakness of sterling since last year’s Brexit vote. International sales fell 3 per cent.

Mulberry said that it had returned to sales growth since the half-year, with international sales jumping 12 per cent and overall sales up 1 per cent in the ten weeks to 2 December.

“We continue to see strong demand from tourists in London and whilst the UK remains uncertain, the group remains in a strong position to invest in further developing the customer experience in key international markets and enhancing its unique UK design and manufacturing base,” Andretta commented.

He said Asia in particular was a focus for further overseas expansion. Mulberry announced a tie-up with Japanese firm Onward Global Fashion in July, since when Andretta said the firm had seen “successful” trading there.

The retailer, which makes about 50 per cent of its bags in two factories based in Somerset, said the losses were also partlyduetoanother£800,000 being invested in marketing.

It also traditionally makes the bulk of its profits in the second half of its financial year. Godfrey Davis, the group’s chairman, said there had been a “solid” UK performance in the half year and first ten weeks of the second half thanks to the tourist boost.

Mulberry added that UK trading had reflected the move towards fewer promotions and more full-price sales, which knocked like-for-like figures but had grown profit margins.

Analysts said the group has been staging a bounce-back over the past two years as it reverses an ill-fated attempt to move into premium luxury and compete with the likes of Gucci and Dior.

It said sales had shown an “encouraging” response to new collections under recently-hired creative director Johnny Coca.

Shares in the company closed up 16p at 1,033p.