Tuesday, 24 March 2020

Mulberry to make "small" H2 loss due to coronavirus




Mulberry said on Tuesday that it's working hard to conserve cash in the business in the light of the rapidly evolving coronavirus situation that’s hitting it hard in its domestic market.


It said that while the board “remains confident in the strength of the Mulberry brand, recent trading in our stores, particularly in the UK, has been severely impacted by the Covid-19 crisis”.

The company closed all of its UK stores on Saturday until further notice and is also “reviewing its international portfolio of stores on a case-by-case basis”.

“The board is working to protect Mulberry's cash and to secure future value for its stakeholders by proactively managing its capital as well as identifying opportunities for cost savings,” it added.

The current financial year ends this Saturday and it's clear that the final few weeks of that year will have been damaged by the virus in the UK. It also seems likely that its operations in other international markets in Europe and Asia will have been hit, but the firm gave no details. 

In its half-year results announcement released in November, the company had highlighted that it expected to be profitable and cash generative in H2. But “as a result of the impact on the company's trading of Covid-19, the board now expects the company to make a small loss in the second half”.

And given the speed at which the scenario is changing, it’s impossible to offer any meaningful guidance on future performance.

The company described its balance sheet as “robust", saying that it had £8.8 million net cash as of March 20. It also has additional liquidity through its £19 million of undrawn bank facilities and said that it "maintains a positive dialogue with its lenders with regard to optimising its operational flexibility and banking covenants”. And importantly, it has “a supportive majority shareholder”.

CEO Thierry Andretta said: “Our highest priority at this time is the health and safety of our colleagues, customers, and all other stakeholders. Whilst it is uncertain how long the virus will directly impact our markets and our businesses, we remain confident in the strength of our brand, and in our strategy over the long term”.

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