TIDMMUL
RNS Number : 5531G
Mulberry Group PLC
26 November 2020
Mulberry Group plc
Results for the twenty-six weeks ended 26 September 2020
Growth in Asian markets and robust digital performance despite
challenging international conditions
Mulberry Group plc ("the Group" or "Mulberry"), the British
luxury brand, announces unaudited results for the twenty-six weeks
ended 26 September 2020 (the "period").
Financial Highlights
-- Group revenue down 29% to GBP48.9m (2019: GBP68.9m) primarily
reflecting impact of COVID-19 and closure of majority of stores
from start of period
-- Digital sales up 68% to GBP23.4m (2019: GBP13.9m)
-- Asia Pacific retail sales increased 28%, driven by ongoing investment in region
-- Adjusted loss before tax of GBP1.9m (2019: GBP10.1m) before
adjusting items of GBP0.5m (2019: GBPnil) reflecting actions taken
in response to COVID-19, strong growth in Asian markets and
strength of digital business
-- Period end Group net cash increased to GBP8.6m (2019:
GBP6.4m), maintained through rigorous cost and cash control
-- Inventory reduced by 13% to GBP33.6m reflecting the benefit
of our agile supply chain and actions taken to manage inventory
levels in line with anticipated demand as a result of COVID-19
Operating Highlights
-- Sales trajectory improving, down 39% in Q1, and down 18% in Q2
-- Digital sales represented 67% of Group revenue in Q1 (2019: 23%), and 32% in Q2 (2019: 17%)
-- Created a successful digital off-price site in April 2020 to
replace lost sales from outlet stores
-- New global pricing strategy implemented in April 2020 to
apply the same retail price globally for Mulberry goods
-- Optimised store network - now comprises 111 retail and
franchise partner stores, a net reduction of 8 stores since the
start of period
-- Accelerated relationships with new and existing digital media
partners to reach younger audiences and drive new customer growth
on digital platforms
Sustainability Highlights
-- Released the most sustainable iterations of the Bayswater and
Lily silhouettes in environmentally certified leathers
-- Manufactured PPE gowns in response to COVID-19 producing 17,000 reusable gowns for the NHS
Current Trading
-- Sales trends experienced in Q2 continued into October, with
improving stores sales, a strong digital performance and continuing
growth in Asia
-- Trading in the 8 weeks to 21 November 2020 was down 19%
relative to the same period last year
-- Double digit growth in Asia Pacific retail revenue
-- Double digit growth in digital revenue
-- Relaunched our most iconic bag, the Alexa, in sustainable
leathers reflecting Mulberry's commitment to responsible
innovation
-- Net cash balances of GBP5.8m at 21 November 2020 and RCF
remains undrawn, as at the date of this report
THIERRY ANDRETTA, CHIEF EXECUTIVE OFFICER, COMMENTED:
"I am proud that in spite of the devastating effects of the
global pandemic, we have made further progress on our long-term
strategy to build Mulberry as a sustainable global luxury brand.
This is focused around: a truly omni-channel network and market
leading digital platform, increased presence in Asia, and a
relentless focus on innovation and sustainability, offering our
customers beautiful products, made to last in our Somerset
factories.
This strategy enabled us to withstand some of the pressures that
we, and indeed the wider retail and hospitality sectors, have been
faced with. In particular, using our market leading global digital
network to replace retail sales with digital wherever possible,
achieving high growth in China and Korea, and reacting quickly to
flex our agile supply chain, enhancing market reactivity and
reducing lead time, to match the increase in digital demand.
In spite of all of these self-help measures, we cannot avoid the
fact that the damage the coronavirus has caused to business,
decimating high streets and the tourism industry, is severe. For
this reason, in order to ensure that the business was able to
navigate through this difficult time, we took the painful decision
to implement a far-reaching cost reduction and optimisation
programme.
As we look to the future, we remain confident in our strategy
and in the relevance and durability of the Mulberry brand. There
are of course many obstacles ahead, not least the upcoming changes
to tax-free shopping in the UK that could hamper the wider retail
and economic recovery, but we are grateful to be able to open our
doors again in England on 2 December and to be able to trade across
all our platforms in this crucial Christmas trading period. I would
like to take this opportunity to thank my colleagues for their
resilience, their hard work and their dedication to Mulberry."
Enquiries:
Mulberry Group plc Tel: +44 (0) 20 7605
Charles Anderson (Group Finance Director) 6793
GCA Altium (Financial Adviser and Tel: +44 (0) 20 7484
NOMAD) 4040
Tim Richardson
Headland (Public Relations) Tel: +44 (0) 20 3805
4822
Lucy Legh / Jane Glover
Barclays (Broker) Tel: +44 (0) 20 3134
9801
Nicola Tennent
Publication on website:
On 19 November 2020, as a consequence of an announcement by
Frasers Group plc that, inter alia, it was reserving the right to
make a voluntary offer for the Company, Mulberry entered an "offer
period" in accordance with The Takeover Code (the "Code").
In accordance with Rule 26.1 of the Code, a copy of this
announcement will be made available at
https://www.mulberry.com/gb/investor-relations . The content of the
website referred to in this announcement is not incorporated into
and does not form part of this announcement.
OVERVIEW
The performance of the Group during the period, like many other
consumer-facing businesses, was materially influenced by the
effects of the global COVID-19 pandemic. Despite this, the Group
has delivered a materially improved financial performance.
We reacted swiftly to the impact of COVID-19, using our market
leading global digital network to replace retail sales with digital
wherever possible and implementing a far-reaching cost reduction
and optimisation programme to ensure that the Group's cost base was
appropriate for the current trading conditions.
The period started with the majority of our stores and both UK
factories closed due to the lock down restrictions imposed by the
UK and other Governments and with many of our store and direct
production teams furloughed pursuant to the UK Coronavirus Job
Retention Scheme (CJRS). Whilst our stores in China and South Korea
re-opened in April 2020, followed by stores in Japan and Europe,
our UK stores and factories were only able to recommence trading in
June 2020.
Trading during the first three months of the period (Q1) was
more severely affected than that during the second three months
(Q2). Overall Group sales in the period were down 29% to GBP48.9m
(2019: GBP68.9m), with sales in Q1 down 39% but sales in Q2 down
18%.
Throughout the period we were able to operate our market leading
digital platforms. Our distribution centre is large enough for
proper safety standards to have been put in place from the outset
and the team has done an outstanding job of dealing with the surge
in digital demand. Strong digital trading and an acceleration in
the shift to online sales offset some of the lost store revenues,
as did strong sales growth of 28% in our Asian markets, driven by
our ongoing investment in that region. Asia Pacific accounted for
22% of Group Retail sales in the period (2019: 13%).
The Group's adjusted loss before tax of GBP1.9m (2019: GBP10.1m)
before adjusting items of GBP0.5m (2019: nil) reflected the actions
taken in response to COVID-19, strong growth in our Asian markets
and the strength of our omni-channel business. (See note 2 for
further details of Alternative Performance Measures.) We maintained
rigorous cost and cash control, ending the period with net cash of
GBP8.6m (2019: GBP6.4m). To manage the anticipated drop in demand
brought about by COVID-19, we were able to reduce our inventory by
13% to GBP33.6m, as we continue to reap the benefit from the
implementation of our agile supply chain programme.
IMPACT OF COVID-19
Mulberry's international stores started to close in response to
the pandemic in mid-January 2020 and by the end of March 2020, we
had closed 70% of our stores worldwide and our UK factories.
Globally, there were no tourist customers in our stores throughout
the period. Our stores in China and South Korea re-opened in April
2020, followed by stores in Japan and Europe. In line with UK
Government advice, we commenced a phased re-opening of our UK
stores and factories in June 2020. Detailed additional safety
standards and procedures for our staff and customers are in place
to allow all of our locations to operate safely.
Our distribution centre in Somerset has remained open, enabling
the digital business to continue to operate and the team has done
an outstanding job of dealing with the surge in digital demand. Our
distribution centre is large enough for proper safety standards to
have been put in place from the outset and we are fortunate that
cases of COVID-19 in our part of Somerset has been extremely
low.
The Group reacted swiftly to minimise the impact of COVID-19 and
we continue to execute a well-developed plan to manage capital,
reduce and optimise costs and maintain a robust liquidity position.
However, the absence of shoppers on the high street in the short
term, and the absence of tourists in the UK and Europe in the
longer term, required a major restructuring of our business. The
CJRS enabled us to take a measured look at the changes required.
Sadly, we concluded that it was necessary to reduce our global
headcount by approximately 25%, which we announced on 8 June 2020.
Without the time afforded by the CJRS, we would have been forced to
act earlier and make deeper cuts. The redundancy process was
completed at the end of July 2020.
FINANCIAL REVIEW
Our results for the 26 weeks to 26 September 2020 were
materially affected by the impact of COVID-19 on the Group and
wider economy and the consequential effect on sales. The impact was
mitigated to an extent by strong growth in our Asian markets, the
strength of our omni-channel business, cost actions taken in
response to COVID-19 and Government support programmes.
Group revenue and gross profit
At the start of the period, 70% of our worldwide stores were
closed due to COVID-19, including all of our stores in the UK,
Europe and North America. Our stores in China and South Korea
re-opened in April 2020, followed by stores in Japan, Europe and
from June 2020, a phased re-opening in the UK.
The strength of our omni-channel business and growth in Asia
Pacific helped to offset the impact of the shut down in the UK,
Europe and North America, with Q1 retail sales down 31%. We saw an
improving trend as stores re-opened, with Q2 retail sales down 18%.
S ales in our capital city stores such as Central London continue
to be depressed, reflecting a lower level of tourists and office
workers, while sales in regional cities have recovered more
strongly, albeit trading below the comparative period. Overall, the
25% decrease in retail sales and 49% decrease in wholesale and
franchise sales led to a 29% reduction in Group revenue to GBP48.9m
(2019: GBP68.9m) for the 26 weeks to 26 September 2020.
Sales analysis for the 26 weeks to 26 September 2020 compared to
the same period last year:
2020 2019
GBP'm GBP'm % Change
Digital 23.4 13.9 +68%
Stores 19.5 43.2 -55%
-------
Retail (omni-channel) 42.9 57.1 -25%
------- ------- -----------
Wholesale and franchise 6.0 11.8 -49%
------- ------- -----------
Group revenue 48.9 68.9 -29%
======= ======= ===========
Digital 18.0 10.5 +71%
Stores 10.0 31.1 -68%
----- ----- -----
UK 28.0 41.6 -33%
----- ----- -----
Digital 1.7 0.9 +89%
Stores 7.9 6.6 +20%
----- ----- -----
Asia Pacific 9.6 7.5 +28%
----- ----- -----
Digital 3.7 2.5 +48%
Stores 1.6 5.5 -71%
----- ----- -----
Rest of world 5.3 8.0 -34%
----- ----- -----
Retail (omni-channel) 42.9 57.1 -25%
===== ===== =====
2020 2019
GBP'm GBP'm % Change
UK 1.1 3.1 -65%
Asia Pacific 0.7 2.1 -67%
Rest of world 4.2 6.6 -36%
------- ------- -----------
Wholesale and franchise 6.0 11.8 -49%
------- ------- -----------
Q1 Q2 2020
GBP'm % Change GBP'm % Change GBP'm % Change
Sales Sales Sales
Digital 14.6 +76% 8.8 +57% 23.4 +68%
Stores 5.5 -74% 14.0 -37% 19.5 -55%
------- --------- ------- --------- ------- ---------
Retail (omni-channel) 20.1 -31% 22.8 -18% 42.9 -25%
------- --------- ------- --------- ------- ---------
Wholesale and franchise 1.7 -74% 4.3 -17% 6.0 -49%
------- --------- ------- --------- ------- ---------
Group revenue 21.8 -39% 27.1 -18% 48.9 -29%
------- --------- ------- --------- ------- ---------
Asia Pacific retail sales increased 28 %, driven by ongoing
investment in this region, offset by a 34% decrease in rest of
world sales. As a result, international retail sales decreased 4 %
to GBP 14.9 m (2019: GBP15.5m) representing 35 % of retail revenue
(2019: 27%).
Direct-to-customer sales accounted for 92% of revenue (2019:
89%) and included sales generated through Mulberry stores
(including franchise partner stores), department stores and digital
channels.
Wholesale and franchise sales decreased 49%, in part due to the
continuing focus on our direct-to-customer model, but mainly due to
the impact of COVID-19 on our partners.
Gross margin for the period was maintained at 59% (2019:
59%).
Other operating expenses
The Group implemented a number of cost saving measures during
the period. COVID-19 has had a dramatic impact on our business and
we expect the recovery in our sales levels over the medium term to
be gradual. Our objective was to ensure that our cost base is in
line with anticipated trading levels. The cost saving actions
included a significant reduction in discretionary costs, the
freezing of pay and recruitment and a temporary 20% pay-cut for plc
Directors. A reduction in employee numbers by approximately 25%
across the Group and the renegotiation or termination of leases
where possible. The Group also accessed relevant UK Government
support programmes, such as business rates relief and benefited
from lower retail depreciation resulting from the prior period
impairment charge.
These actions achieved a 34% reduction in operating expenses on
a full-year basis.
Other operating income
Included within Other operating income is GBP4.5m (52 weeks
ended 28 March 2020: GBP0.2m) of grants receivable under HM Revenue
& Customs CJRS and equivalent schemes offered in other non-UK
territories.
Loss before tax
The Group's adjusted loss before tax for the period was GBP1.9m
(2019: GBP10.1m). The reported loss before tax for the period was
GBP2.4m (2019: GBP10.1m). See note 2 for further details of
Alternative Performance Measures.
Adjusting items in the period amounted to GBP0.5m (2019: GBPnil)
largely reflecting business restructuring costs, offset by a credit
in respect of the closure of our two stores in Canada.
Taxation
The Group reported a tax credit for the period of GBP0.3m (2019:
GBP1.1m), an effective tax rate of 14% (2019: 11%). The effective
tax rate is lower than the UK tax rate for the period of 19%
primarily due to not recognising deferred tax assets on all current
period losses.
Cash flow
The net increase in cash and cash equivalents per the cash flow
statement of GBP0.6m (2019: decrease of GBP0.8m) reflected the cost
actions taken to offset the decline in revenue, further working
capital benefits, including a 13% reduction in inventory to
GBP33.6m and lower capital expenditure. The reduction in lease
payments and interest paid was in part due to the negotiation of
extended payment terms with landlords, but also the renegotiation
and termination of leases where possible.
Borrowing facilities
The Group's net cash balance (cash and cash equivalents less
overdrafts) at 26 September 2020 was GBP8.6m (2019: GBP6.4m). Net
cash comprises cash balances of GBP8.6m (2019: GBP11.7m) less bank
borrowings of GBPnil (2019: GBP5.3m), which excludes loans from
related parties and controlling interests of GBP4.9m (2019:
GBP4.3m).
During the period, the Group extended its secured GBP15.0m
revolving credit facility (RCF) with HSBC until March 2022 and
renegotiated the covenants. The RCF covenants are tested quarterly
using a 'frozen GAAP' basis which exclude the impact of IFRS 16 and
include a minimum 12-month rolling EBITDA target and a maximum net
debt target.
In addition, the Group has a GBP4.0m overdraft facility with
HSBC in the UK and a USD1.9m overdraft facility in China, both of
which are renewed annually.
Going concern
The Group has continued to trade significantly ahead of our
original base case with a cash position materially ahead of
assumptions. As a result, the Directors remain confident that
despite the current uncertainties, the Group has the financial
resources to take opportunities as they arise and is in a strong
financial position.
UPDATE ON STRATEGIC PROGRESS
Our aim is to build Mulberry as a sustainable global luxury
brand, creating value for all our stakeholders, whilst not
forgetting to stick to our roots - that Mulberry will make a
positive difference to its people, the environment and the
communities in which we work.
With our rich heritage in leather craftsmanship and reputation
for innovation, we strive to grow the Group through our four
strategic pillars, which focus on omni-channel distribution,
international development, constant innovation and a sustainable
lifecycle.
We believe that being leaders in these areas is the basis of our
future success and has enabled the Group to mitigate the impact of
COVID-19 and improve upon our base case sales projections during
the period. Progress in each area is discussed below:
Strategic pillar 1 - Omni-channel distribution
We aim to create a luxury experience for our customers,
regardless of which channel they choose to shop with us. Our
omni-channel approach allows customers to research, buy and return
products anywhere across our stores and online. Our digital
platform is at the core of this approach, seamlessly integrated
with our stores and managed by a multi-disciplinary team with a
single global approach to customers and inventory.
The strength of our digital business helped to offset the impact
of the store closures at the beginning of the period and to achieve
overall sales for the period ahead of our initial expectations.
Even after our stores re-opened, digital sales continued to grow
and represented 32% of Group sales in Q2 (Q1: 67%) reflecting the
ever-increasing importance of this channel in the current
environment. We also created a digital off-price site in April 2020
to replace lost sales from our outlet stores, which has been
successful.
Our new Mulberry store concept includes innovative
customer-facing technology which supports our omni-channel
proposition. This has enabled our stores to offer virtual
appointments and support our digital business, despite the impact
of less footfall.
We have rationalised our store network. At the period-end the
store network comprised 111 retail and franchise partner stores, a
net reduction of 8 stores since the start of the period. Following
a review of anticipated trading levels, we took the decision to
close 4 stores and 1 concession in the UK, 2 stores in Canada and a
franchise partner closed 1 store in Europe.
Strategic pillar 2 - International development
We are optimising our digital channels and global store network,
with a particular focus on Asia Pacific, which continues to offer a
significant growth opportunity.
Asia Pacific retail sales increased 28 %, driven by ongoing
investment in this region, with China retail sales up 75% and South
Korea retail sales up 35%, offset by a 26% decrease in Japan sales.
The growth in Asia Pacific was offset by a 34% decrease in rest of
world sales. The investment in the Group's subsidiaries in China,
Korea and Japan is making good progress and after two years of
substantial cost and investment, these businesses are approaching
break-even.
The launch of a new global pricing strategy was implemented in
April 2020. The new pricing applies the same retail price globally.
Previously, in common with other luxury brands, prices outside
Europe were higher. This appears to be contributing to the strong
growth in Asian markets and is relevant for the luxury digital
consumer.
As we continue to grow brand awareness in Asia, we expect
international revenue as a proportion of Group revenue to
increase.
Strategic pillar 3 - Constant innovation
We continue to innovate with new services, new materials and
methods of creation and production to adapt to changing customer
tastes and meet demand. At the same time, we are transforming our
agile supply chain, enhancing market reactivity and reducing lead
time, to match the increase in digital demand.
The Spring Summer collection focus was on continuing to create a
sustainable legacy through our commitment to responsible
innovation, timeless quality and beautiful design for contemporary
lives. We revisited our most iconic and best-loved silhouettes, in
line with our Mulberry Green responsibility targets on both
materials and manufacturing. The Bayswater, Amberley, Darley, Lily,
Millie and Iris are manufactured at our carbon neutral UK
factories, were reinvigorated with updates ranging from gold
standard leather from environmentally accredited tanneries to
sustainably sourced bag linings and Better Cotton Initiative (BCI)
accredited organic cotton care bags.
Strategic pillar 4 - Sustainable lifecycle
We are focused on developing Mulberry 'families' that are
made-to-last, while delivering best-in-class customer service,
including lifetime repair and aftercare. We are building on
Mulberry's class-leading quality, focusing on sustainability in
supply, craftmanship, packaging and distribution, which is also
emerging as a key focus for all our customers.
In April 2020, we began manufacturing PPE gowns in response to
COVID-19, crafted to Government-issued guidelines with a specially
sourced material that is fluid-resistant and washable to ensure
they can be used safely multiple times. We worked quickly to
transform our Somerset factories from leathers goods to PPE, and
more than 17,000 gowns were manufactured and sourced by NHS Trusts,
dental practices and other front-line workers. We also raised over
GBP75,000 for the National Emergency Trust via our Coronavirus
Appeal.
In September, we released the most sustainable iterations of the
Bayswater and Lily silhouettes in environmentally certified
leathers. These feature on our digital site as "Sustainable Icons"
on Mulberry.com, where we have enhanced the product information to
provide more information on the sustainability credentials for each
item.
Marketing and brand
We were quick to pivot our marketing strategy to respond to
COVID-19 with a continued focus on international growth and a
digital first strategy. In early April, we launched our 'Take Root,
Branch Out campaign' with global musicians, poets and chefs taking
over our social channels to engage with our community during lock
down.
September's launch of the Mini Iris handbag saw our continued
investment in Asia as we launched this new design on Tmall. Using
an influencer campaign and live stream; an example of strong
localised brand marketing, which is in line with territory
preferences.
Given the importance of digital trading during COVID-19, we
accelerated our relationships with new and existing digital media
partners to reach younger audiences and drive new customer growth
on our digital platforms.
CURRENT TRADING AND OUTLOOK
The sales trends experienced in Q2 continued into October, with
improving stores sales, a strong digital performance and continuing
growth in Asia.
However, our stores in England are currently closed following
the commencement of a second national lockdown on 5 November 2020,
which is expected to run until 2 December 2020. As with the initial
lockdown period, the negative impact on store sales is being
mitigated to an extent by the strength of our omni-channel business
and growth in our Asia markets. Group sales in the 8 weeks to 21
November 2020 were down 19% relative to the same period last year.
November is normally the low point in the Group ' s annual cash
cycle. The Group had net cash balances of GBP5.8m at 21 November
2020 and has not utilised its RCF, as at the date of this
report.
In the week commencing 9 November 2020, we relaunched the Alexa
bag, one of our most desirable silhouettes. The Alexa has been
relaunched in sustainable leather reflecting Mulberry's commitment
to responsible innovation. The range is made with leather from gold
standard, environmentally accredited tanneries and has been crafted
at our carbon neutral UK factories in Somerset. We have been very
pleased by the strong reaction to this relaunch.
Despite the recent positive news about vaccine progress,
COVID-19 is likely to continue to impact our trading for at least
the remainder of the current financial year. As previously stated
in the Company's announcement of preliminary results for the 52
weeks ended 28 March 2020, released on 5 October 2020, sales are
expected to be lower than the period ended 28 March 2020, but the
Group expects losses to be reduced [1] . Our expectations will
undoubtedly be negatively affected by any further countrywide lock
downs or a "second wave" of COVID-19. We remain confident in the
strength of the Mulberry brand and our strategy over the longer
term.
[1] In accordance with Rule 28.1 (c) of the Takeover Code (the
"Code"), which applies as the Company is currently in an "offer
period", our Directors must provide a "Directors' confirmation" in
respect of this statement since it constitutes a profit forecast
for the purposes of the Code. Accordingly, our Directors confirm
that the statement remains valid, that it was properly compiled on
the basis of the assumptions set out in note 8 and that the basis
of accounting used is consistent with the Company's accounting
policies.
CONSOLIDATED INCOME STATEMENT
26 WEEKSED 26 september 2020
Note Restated* unaudited
Unaudited 26 weeks ended Audited
26 weeks ended 28 September 2019 GBP'000 52 weeks ended 28 March
26 September 2020 2020
GBP'000 GBP'000
Revenue 48,919 68,871 149,321
Cost of sales (20,019) (27,959) (58,203)
Gross profit 28,900 40,912 91,118
Impairment charge related
to property, plant and
equipment - - (7,143)
Impairment charge related
to right-of-use assets - - (24,947)
Other operating expenses (33,793) (49,177) (103,141)
Other operating income (1) 4,691 422 1,093
Operating loss (202) (7,843) (43,020)
Share of results of
associates (32) (9) 49
Finance income 3 35 83
Finance expense (2,121) (2,275) (4,978)
Loss before tax (2,352) (10,092) (47,866)
Tax credit 4 330 1,115 998
Loss for the period (2,022) (8,977) (46,868)
Attributable to:
Equity holders of the
parent (1,713) (8,517) (44,136)
Non-controlling interests (309) (460) (2,732)
Loss for the period (2,022) (8,977) (46,868)
Basic loss per share 6 (3.4p) (15.1p) (78.9p)
Diluted loss per share 6 (3.4p) (15.1p) (78.9p)
All activities arise from continuing operations.
(1) Included within Other operating income is GBP4,537,000 (52
weeks ended 28 March 2020: GBP184,000) of grants receivable under
HM Revenue & Customs Coronavirus Job Retention Scheme, and
equivalent schemes offered in other non-UK territories.
* Please refer to note 2 for further details of the restatement
of the prior period. Subsequent to reporting interim results for
the 26 weeks to 28 September 2019, the Group reassessed the
approach to determine the initial right-of-use asset impairment
under IFRS 16. Impairment charges arising from the new impairment
methodology under IFRS 16 have been treated as a transition
adjustment and charged to retained earnings. The prior period
interim accounts have been restated to reflect the impact of this
assessment.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
26 WEEKSED 26 SEPTEMBER 2020
Restated*
Unaudited unaudited Audited
26 weeks ended 26 weeks ended 52 weeks ended
26 September 2020 GBP'000 28 September 2019 GBP'000 28 March 2020
GBP'000
Loss for the period (2,022) (8,977) (46,868)
Items that may be reclassified
subsequently to profit or loss;
Exchange differences on
translation of foreign
operations 411 467 608
Profit on cash flow hedges - 122 123
Income tax relating to items
that may be reclassified
subsequently to profit or loss - (84) (129)
Total comprehensive expense for the
period (1,611) (8,472) (46,266)
Attributable to:
Equity holders of the parent (1,507) (8,037) (43,291)
Non-controlling interests (104) (435) (2,975)
Total comprehensive expense for the
period (1,611) (8,472) (46,266)
* Please refer to note 2 for further details of the restatement
of the prior period. Subsequent to reporting interim results for
the 26 weeks to 28 September 2019, the Group reassessed the
approach to determine the initial right-of-use asset impairment
under IFRS 16. Impairment charges arising from the new impairment
methodology under IFRS 16 have been treated as a transition
adjustment and charged to retained earnings. The prior period
interim accounts have been restated to reflect the impact of this
assessment.
CONSOLIDATED BALANCE SHEET
AT 26 SEptember 2020
Restated* unaudited
Unaudited 28 September 2019 GBP'000 Audited
26 September 2020 GBP'000 28 March 2020
GBP'000
Non-current assets
Intangible assets 15,032 14,227 14,701
Property, plant and equipment 15,436 25,816 16,953
Right of use assets 42,936 88,322 45,920
Interests in associates 128 268 187
Deferred tax asset 1,487 1,968 1,488
75,019 130,601 79,249
Current assets
Inventories 33,580 38,691 34,853
Trade and other receivables 11,453 13,561 11,075
Current tax asset 432 662 420
Cash and cash equivalents 8,595 11,713 7,998
54,060 64,627 54,346
Total assets 129,079 195,228 133,595
Current liabilities
Trade and other payables (23,739) (21,950) (21,955)
Lease liabilities (17,849) (17,477) (15,329)
Borrowings (3,431) (7,142) (3,424)
(45,019) (46,569) (40,708)
Net current assets 9,041 18,058 13,638
Non-current liabilities
Lease liabilities (70,400) (91,755) (76,775)
Borrowings (1,491) (2,438) (2,591)
(71,891) (94,193) (79,366)
Total liabilities (116,910) (140,762) (120,074)
Net assets 12,169 54,466 13,521
Equity
Share capital 3,004 3,004 3,004
Share premium account 12,160 12,160 12,160
Own share reserve (906) (1,378) (1,061)
Capital redemption reserve 154 154 154
Foreign exchange reserve 1,735 1,226 1,323
Retained earnings (54) 41,154 1,761
Equity attributable to holders of the
parent 16,093 56,320 17,341
Non-controlling interests (3,924) (1,854) (3,820)
Total equity 12,169 54,466 13,521
* Please refer to note 2 for further details of the restatement
of the prior period. Subsequent to reporting interim results for
the 26 weeks to 28 September 2019, the Group reassessed the
approach to determine the initial right-of-use asset impairment
under IFRS 16. Impairment charges arising from the new impairment
methodology under IFRS 16 have been treated as a transition
adjustment and charged to retained earnings. The prior period
interim accounts have been restated to reflect the impact of this
assessment.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
26 WEEKSED 26 SEPTEMBER 2020
Share Own Capital Cashflow Foreign Non-controlling
Share premium share re- hedge exchange Retained Total interest Total
capital account reserve demption reserve reserve earnings GBP'000 GBP'000 equity
GBP'000 GBP'000 GBP'000 reserve GBP'000 GBP'000 GBP'000 GBP'000
GBP'000
As at 30 March 2019 3,002 12,072 (1,378) 154 (100) 821 67,555 82,126 (1,419) 80,707
Impairment on IFRS 16
transition (note 2)
* - - - - - - (17,770) (17,770) - (17,770)
Loss for the period - - - - - - (8,517) (8,517) (460) (8,977)
Other comprehensive
income for the
period - - - - 100 380 - 480 25 505
Total comprehensive
income/(expense) for
the period - - - - 100 380 (8,517) (8,037) (435) (8,472)
Issue of share
capital 2 88 - - - - - 90 - 90
Credit for employee
share-based payments - - - - - - (114) (114) - (114)
Non-controlling
interest foreign
exchange - - - - - 25 - 25 - 25
As at 28 September
2019 restated * 3,004 12,160 (1,378) 154 - 1,226 41,154 56,320 (1,854) 54,466
Loss for the period - - - - - - (35,619) (35,619) (2,272) (37,891)
Other comprehensive
income/(expense) for
the period - - - - - 366 - 366 (268) 98
Total comprehensive
income/(expense) for
the period - - - - - 366 (35,619) (35,253) (2,540) (37,793)
Charge for employee
share-based payments - - - - - - 90 90 - 90
Impairment of shares
in trust - - 317 - - - (317) - - -
Non-controlling
interest foreign
exchange - - - - - (268) - (268) - (268)
Adjustments arising
from movement in
non-controlling
interest - - - - - - (574) (574) 574 -
Dividends paid - - - - - - (2,973) (2,973) - (2,973)
As at 28 March 2020 3,004 12,160 (1,061) 154 - 1,324 1,761 17,342 (3,820) 13,522
Loss for the period - - - - - - (1,713) (1,713) (309) (2,022)
Other comprehensive
income for the
period - - - - - 206 - 206 205 411
Total comprehensive
income/(expense) for
the period - - - - - 206 (1,713) (1,507) (104) (1,611)
Charge for employee
share-based payments - - - - - - 53 53 - 53
Impairment of shares
in trust - - 155 - - - (155) - - -
Non-controlling
interest foreign
exchange - - - - - 205 - 205 - 205
As at 26 September
2020 3,004 12,160 (906) 154 - 1,735 (54) 16,093 (3,924) 12,169
* Please refer to note 2 for further details of the restatement
of the prior period. Subsequent to reporting interim results for
the 26 weeks to 28 September 2019, the Group reassessed the
approach to determine the initial right-of-use asset impairment
under IFRS 16. Impairment charges arising from the new impairment
methodology under IFRS 16 have been treated as a transition
adjustment and charged to retained earnings. The prior period
interim accounts have been restated to reflect the impact of this
assessment.
CONSOLIDATED CASH FLOW STATEMENT
26 WEEKSED 26 september 2020
Restated* unaudited
Unaudited 26 weeks ended Audited
26 weeks ended 28 September 2019 52 weeks ended 28 March 2020
26 September 2020 GBP'000 GBP'000 GBP'000
Operating loss for the period (202) (7,843) (43,020)
Adjustments for:
Depreciation and impairment of
property, plant and equipment 2,311 2,291 13,627
Depreciation and impairment of
right-of-use assets 3,654 9,100 41,551
Amortisation of intangible
assets 542 523 1,165
(Profit)/loss on sale of
property, plant and equipment (2,215) 113 (16)
Share-based payments
charge/(credit) 53 (114) (24)
Operating cash flows before
movements in working capital 4,143 4,070 13,283
Decrease in inventories 1,335 1,516 5,006
(Increase)/decrease in
receivables (378) (339) 1,560
Increase in payables 1,532 1,636 1,848
Cash generated by operations 6,632 6,883 21,697
Income taxes received 332 1,297 1,847
Interest paid (1) (943) (2,275) (4,978)
Net cash inflow from operating
activities 6,021 5,905 18,566
Investing activities:
Interest received and gains on
foreign exchange contracts 3 35 83
Purchases of property, plant and
equipment (657) (2,821) (5,121)
Proceeds from disposal of
property, plant and equipment - - 39
Acquisition of intangible fixed
assets (633) (822) (1,728)
Net cash used in investing
activities (1,287) (3,608) (6,727)
Financing activities:
Dividends paid - - (2,973)
Proceeds on issue of shares - 2 2
Increase in loans from
non-controlling interests - 1,996 783
Increase in loans from related
parties - - 1,707
New borrowings - 5,000 -
Repayment of loans from
non-controlling interests - (1,090) (1,090)
Repayment of borrowings (750) (952) (566)
Principle elements of lease
payments (1) (3,343) (8,011) (14,257)
Net cash used in financing
activities (4,093) (3,055) (16,394)
Net increase/(decrease) in cash
and cash equivalents 641 (758) (4,555)
Cash and cash equivalents at
beginning of period 7,998 12,377 12,377
Effect of foreign exchange rate
changes (44) 94 176
Cash and cash equivalents at end
of period 8,595 11,713 7,998
* Please refer to note 2 for further details of the restatement
of the prior period. Subsequent to reporting interim results for
the 26 weeks to 28 September 2019, the Group reassessed the
approach to determine the initial right-of-use asset impairment
under IFRS 16. Impairment charges arising from the new impairment
methodology under IFRS 16 have been treated as a transition
adjustment and charged to retained earnings. The prior period
interim accounts have been restated to reflect the impact of this
assessment.
(1) For the 26 weeks ended 28 September 2019 GBP2,145,000 of
interest on lease payments was previously included in principal
element of lease payments and is now included in interest paid.
Notes to the condensed financiAL statements
26 WEEKSED 26 SEPTEMBER 2020
1. GENERAL INFORMATION
Mulberry Group plc is a company incorporated in the United
Kingdom under the Companies Act 2006. The half year results and
condensed consolidated financial statements for the 26 weeks ended
26 September 2020 (the interim financial statements) comprise the
results for the Company and its subsidiaries (together referred to
as the Group) and the Group's interest in associates. The interim
financial statements for the 26 weeks ended 26 September 2020 have
not been reviewed or audited.
The information for the 52 weeks ended 28 March 2020 does not
constitute statutory accounts as defined in section 434 of the
Companies Act 2006. The statutory accounts for that period were
approved by the Board of Directors on 5 October 2020 and have been
filed with the Registrar of Companies. The auditor's report on
those statutory accounts was not qualified, did not include a
reference to any matters to which the Auditor drew attention by way
of emphasis without qualifying the report and did not contain
statements under section 498(2) (3) of the Companies Act 2006.
2. ACCOUNTING POLICIES AND BASIS OF PREPARATION
The accounting policies and methods of computation followed in
the interim financial statements are consistent with those as
published in the Group's Annual Report and Financial Statements for
the 52 weeks ended 28 March 2020.
These condensed consolidated interim financial statements for
the 26 weeks ended 26 September 2020 have been prepared in
accordance with IAS 34 'Interim Financial Reporting' as adopted by
the European Union. This report should be read in conjunction with
the Group's financial statements for the 52 weeks ended 28 March
2020, which have been prepared in accordance with International
Financial Reporting Standards (IFRSs) as adopted by the European
Union.
The Annual Report and Financial Statements are available from
the Group's website (www.mulberry.com) or from the Company
Secretary at the Company's registered office, The Rookery,
Chilcompton, Bath, England, BA3 4EH.
IFRS 16 Leases - COVID-19 Related Rent Concessions
THE COVID-19 Related Rent Concessions amendment to IFRS16 Leases
was adopted by the IASB on 28 May 2020 and endorsed by the European
Union on 12 October 2020. The amendment applies to accounting
periods from 1 June 2020 but early application is permitted and the
Group has elected to apply the amendment in the current period. The
amendment allows for a simplified approach to accounting for rent
concessions which occur as a direct result of COVID-19 and for
which all of the following criteria are met;
-- The change in lease payments results in revised consideration
that is substantially the same, or less than, the consideration
immediately prior to the change; and
-- The concession affects only payments originally due on or before 30 June 2021; and
-- There is no substantive change to other terms and conditions of the lease.
In the event that a simplified approach can be adopted, a lessee
can account for the concession as if it were not a lease
modification.
During the period, the Group has agreed one COVID-19 related
rent concession which meets the above criteria in the form of a
legally binding agreement which provides a temporary change from
base to turnover related rent. The reduction in rent has been
accounted for as a negative variable lease payment within net
operating expenses.
Two other rent concessions were also agreed during the period
which do not meet the above criteria, and which have therefore been
accounted for as lease modifications under IFRS 16.
RESTATEMENT OF PRIOR PERIOD
During the 52 weeks ended 28 March 2020 but subsequent to
reporting interim results for the 26 weeks to 28 September 2019,
the Group reassessed the approach to determine the initial
right-of-use asset impairment on adoption of IFRS 16 Leases for
stores which had impairment indicators at 30 March 2019. This
included Bond St, Cabazon, Yorkdale PC Hooftstraat and Paris. As a
result, impairment charges of GBP17,770,000 arising from the new
impairment methodology were treated as a transition adjustment and
charged to opening retained earnings and the prior period interim
accounts have been restated to reflect the impact of this
assessment.
The impact of the reassessment not only resulted in a change to
the initial right-of-use asset calculation and reserves as outlined
above, but also to the loss for the period ended 28 September 2019
as a result of the corresponding impact on impairment and
depreciation charges, as summarised below.
Reported Restated
26 weeks 26 weeks ended 28 September 2019
ended 28 GBP'000
September
2019
GBP'000
Right-of-use assets 105,259 88,322
Reserves 58,136 41,154
Loss for the period (9,765) (8,977)
CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION
UNCERTAINTY
Preparation of the condensed consolidated interim financial
statements requires the Directors to make certain estimates and
judgements that affect the measurement of reported revenues,
expenses, assets and liabilities.
The significant accounting judgements and key sources of
estimation uncertainty applied in the preparation of the condensed
consolidated interim financial statements are consistent with those
described on pages 75-77 of the Group's Annual Report and Financial
Statements for the 52 weeks ended 28 March 2020.
PRINCIPAL RISKS AND UNCERTAINTIES
The management of the business and the execution of the Group's
growth strategies are subject to a number of risks and
uncertainties that could adversely affect the Group's future
development. The principal risks and uncertainties for the Group,
and the key mitigating actions used to address them are consistent
with those outlined on pages 23-31 of the Group's Annual Report and
Financial Statements for the 52 weeks ended 28 March 2020.
As at 26 September 2020, the UK Government's recent announcement
that it intends to abolish the VAT Retail Export Scheme ("VAT RES")
on 31 December 2020 represents a new external risk. VAT RES, often
referred to as 'tax-free shopping' currently permits overseas
visitors from outside the European Union ("EU") to recover VAT on
purchases made in the UK, when those purchases are subsequently
exported.
The business has already been negatively impacted by the effect
of COVID-19 on global tourism, and as a result, sales to overseas
visitors have declined significantly. In the event that the VAT RES
scheme is abolished, this would potentially result in further loss
of sales to overseas visitors, as well as preventing a recovery of
these sales when global tourism is able to resume in future.
Further deterioration in revenue would impact the Group's return to
profitability and jobs across all sectors of the business.
Mulberry, together with several other UK retail and tourism
businesses, has issued an open letter to the UK Government calling
for a reversal of this plan.
ALTERNATIVE PERFORMANCE MEASURES
In reporting financial information, the Group presents an
Alternative Performance Measure ("APM"), which is not defined or
specified under the requirements of IFRS. The APM used by the Group
is adjusted profit/(loss) before tax.
The Group believes that this APM, which is not considered to be
a substitute for, or superior to, IFRS measures, provides
stakeholders with additional helpful information on the performance
of the business. This APM is consistent with how the business
performance is planned and reported within the internal management
reporting to the Board of Directors. This measure is also used for
the purpose of setting remuneration targets. The Group makes
certain adjustments to the statutory profit or loss measures in
order to derive the APM. Adjusting items are those items which, in
the opinion of the Directors, should be excluded in order to
provide a consistent and comparable view of the performance of the
Group's ongoing business. Generally, this will include those items
that are largely one-off and material in nature as well as income
or expenses relating to acquisitions or disposals of businesses or
other transactions of a similar nature. Treatment as an adjusting
item provides stakeholders with additional useful information to
assess the year-on-year trading
performance of the Group.
A reconciliation of reported loss before tax to adjusted loss
before tax is set out below.
Audited
Unaudited Unaudited 52 weeks ended 28 March
26 weeks ended 26 weeks ended 28 2020
26 September 2020 GBP'000 September 2019 GBP'000 GBP'000
Reconciliation to adjusted
loss before tax
Loss before tax (2,352) (10,092) (47,866)
Restructuring costs 2,151 - 676
Store closure
(credit)/costs (1,992) - 886
Licence agreement exit 300 - -
costs
Impairment charge related
to property, plant and
equipment - - 7,143
Impairment charge related
to right-of-use assets - - 24,947
Adjusted loss before tax -
non-GAAP measure (1,893) (10,092) (14,214)
Adjusted basic loss per
share (note 6) (3.4p) (15.1p) (22.4p)
Adjusted diluted loss per
share (note 6) (3.4p) (15.1P) (22.4p)
Restructuring costs
During the period, one-off charges of GBP2,151,000 (2020: GBPnil) were incurred relating to
people restructuring costs.
Store closure (credit)/costs
During the period, international stores were closed which had not been trading in line with
expectations. Closure costs relate to lease exit and redundancy costs and are net of a profit
on disposal of right of use assets.
Licence agreement exit costs
During the period the Group incurred charges of GBP300,000 (2019: GBPnil) from its Ready-to-wear
and Footwear licence partner relating to final samples and materials on non-renewal of the
licence and distribution agreement for these lifestyle products.
3. GOING CONCERN
In determining whether the Group's accounts can be prepared on a going concern basis, the
Directors considered the Group's business activities and cash requirements together with factors
likely to affect its performance and financial position, including the current and future
anticipated impact of COVID-19. The going concern period reviews the 12 month period from
the date of this announcement to December 2021.
The key judgements in relation to the going concern assessment are in respect of the ongoing
impact of COVID-19 on the Group. They include the current lockdowns in Europe and the timing
of the Group's recovery to pre-COVID-19 trading levels and the likelihood and impact of further
lockdowns, including their duration and the impact on consumer demand in the markets in which
the Group operates. When making these judgements, the Directors considered trading levels
seen during the first wave of lockdowns and performance of the stores during the first re-openings
and the outlook for the Group against the detailed base case scenario. The Directors have
also considered a further downside scenario and a reverse stress test scenario. These are
described in further detail below.
The Group had net cash of GBP8.6 million (2019: GBP6.4 million) at 26 September 2020 and had
not drawn down on its revolving credit facility.
Borrowing facilities
The Group has a committed GBP15.0m revolving credit facility with security granted in favour
of HSBC banking. In addition, the Group has a GBP4.0m overdraft facility and a further USD1.9m
overdraft facility in China, which are not committed facilities and therefore not considered
by the Directors as part of the going concern assessment. Further details regarding the borrowing
facilities and covenants is included within the financial review.
The revolving credit facility was not drawn down at the period end and remains undrawn at
the date of this report. The Group had net cash of GBP5.8m at 21 November 2020.
Base case scenario
The Directors' base case scenario assumes that revenues do not recover to levels recorded
in the period to 28 March 2020 in the short term. It includes the impact of the current second-wave
lockdowns in Europe with the majority of our European stores closed including all our England
stores for a period of 4 weeks from 5 November 2020 to 2 December 2020. The impact of COVID-19
on the wider economy, particularly the UK, will also have a consequential effect on demand.
The Directors assume the trading experienced through the Group's digital channels will continue,
although not at sufficient levels to fully offset the expected slower growth in the stores
once reopened. The base case scenario assumes a 27% reduction in revenue for financial period
ended 27 March 2021 against the prior period.
The scenario includes the cost saving actions taken in the first half of the period as detailed
in the 2020 Annual Report and access to the UK's Coronavirus Job Retention Scheme during the
4 weeks of store closures in England.
Under this scenario, banking covenants will be met and borrowing levels remain within the
Group's committed borrowing facilities over the 12-month going concern period.
Downside scenario
The Directors' downside scenario extends the England store closures for a further two months
to the end of January 2021. The impact of this would result in a 15% reduction in Group revenue
between December and March against the base case.
The scenario includes cost mitigation from accessing the UK's Coronavirus Job Retention Scheme
during the 12 week lockdown period from 5 November 2020 to 27 January 2021.
Under this scenario, banking covenants will be met and borrowing levels remain within the
Group's committed borrowing facilities over the 12-month going concern period.
Reverse stress test scenario
The Directors have reviewed a reverse stress test scenario that models the decline in sales
that the Group would be able to absorb before triggering a breach of banking covenants. As
outlined in the 2020 Annual Report, the Directors believe that this scenario is remote.
The reverse stress test assumes a further 13% reduction on revenue against the downside scenario,
offset by working capital optimisation and a further 20% reduction in payroll for UK office
and production staff and discretionary costs (marketing, consumables, travel and other goods
not for resale). Inventory production and purchases have been reduced in line with the anticipated
demand under this scenario. Additional costs arising from Brexit have been assumed under this
scenario, effective from 1 January 2021.
Under this scenario, borrowing levels remain within the Group's committed borrowing facilities
with 67% facility utilisation at peak borrowing, however, the minimum EBITDA target would
be breached in September 2021. Whilst the Directors believe that this scenario is remote,
it would allow time for further actions to be taken, including a possible further relaxation
of banking covenants. Whilst there is no guarantee that this would be agreed, the Group currently
maintains a good relationship with its lender.
Going concern basis
Based on the assessment outlined above, the Directors have a reasonable expectation that the
Group has access to adequate resources to enable it to continue to operate as a going concern
for the foreseeable future. For these reasons, the Directors consider it appropriate for the
Group to continue to adopt the going concern basis of accounting in preparing the Interim
Report and financial statements.
4. TAXATION
The tax credit is calculated by applying the forecast full year
effective tax rate to the interim loss and calculating the deferred
tax balance for the period.
5. DIVID
Audited
Unaudited Unaudited 52 weeks ended 28 March
26 weeks ended 26 26 weeks ended 28 2020
September 2020 September 2019 GBP'000 GBP'000
GBP'000
Dividend of 5p per ordinary
share paid during the
period - - 2,973
The final dividend for the 53 weeks ended 30 March 2019 was paid
to shareholders on 21 November 2019.
6. EARNINGS PER SHARE ('EPS')
Restated
Unaudited unaudited Audited
26 weeks ended 26 weeks ended 52 weeks ended 28 March 2020
26 September 2020 28 September 2019
Basic loss per share (3.4p) (15.1p) (78.9p)
Diluted loss per share (3.4p) (15.1p) (78.9p)
Adjusted basic loss per share (3.4p) (15.1p) (22.4p)
Adjusted diluted loss per share (3.4p) (15.1p) (22.4p)
Earnings per share is calculated based on the following
data:
Restated
Unaudited unaudited Audited
26 weeks ended 26 weeks ended 52 weeks ended
26 September 2020 GBP'000 28 September 2019 GBP'000 28 March 2020
GBP'000
Loss for the period for basic and
diluted earnings per share (2,022) (8,977) (46,868)
Adjustments to exclude exceptional
items:
Restructuring costs 1,757 - 584
Store closure (credit)/costs (1,992) - 886
Licence agreement exit costs* 243 -
Impairment relating to retail assets - - 7,143
Impairment relating to right-of-use
assets - - 24,947
Adjusted loss for the period for basic
and diluted earnings per share (2,014) (8,977) (13,308)
*These items are included net of tax
Unaudited Unaudited Audited
26 weeks ended 26 weeks ended 52 weeks ended 28 March 2020
26 September 2020 Million 28 September 2019 Million Million
Weighted average number of
ordinary shares for the
purpose of basic EPS 59.5 59.4 59.4
Effect of dilutive potential - - -
ordinary shares: share
options
Weighted average number of
ordinary shares for the
purpose of diluted EPS 59.5 59.4 59.4
The weighted average number of ordinary shares in issue during
the period excludes those held by the Employee Share Trust.
7. BUSINESS AND GEOGRAPHICAL SEGMENTS
IFRS 8 requires operating segments to be identified on the basis
of internal reports about components of the Group that are
regularly reviewed by the Chief Operating Decision Maker ("CODM"),
defined as the Board of Directors, to allocate resources to the
segments and to assess their performance. Inter-segment pricing is
determined on an arm's length basis. The Group also presents
analysis by geographical destination and production.
(a) Business segment
The Group has identified one reportable segment, which designs,
manufactures and manages the Mulberry brand. Therefore, the finance
income and expense are attributable to this segment.
The accounting policies of the reportable segment are the same
as described in the Group's financial statements. Information
regarding the results of the reportable segment is included below.
The distribution of product globally is monitored and optimised at
a Group level and effected via the Group's distribution centres in
the UK, North America and Asia. Performance for the segment is
assessed based on operating (loss)/profit.
GROUP INCOME STATEMENT
26 WEEKSED 26 september 2020
Note Restated* unaudited
Unaudited 26 weeks ended Audited
26 weeks ended 28 September 2019 GBP'000 52 weeks ended 28 March
26 September 2020 2020
GBP'000 GBP'000
Retail 19,539 43,142 89,167
Digital 23,364 13,893 36,242
Wholesale 6,016 11,836 23,912
Total revenue 48,919 68,871 149,321
Cost of sales (20,019) (27,959) (58,203)
Gross profit 28,900 40,912 91,118
Impairment charge related
to property, plant and
equipment - - (7,143)
Impairment charge related
to right-of-use assets - - (24,947)
Other operating expenses (33,793) (49,177) (103,141)
Other operating income 4,691 422 1,093
Operating loss (202) (7,843) (43,020)
Share of results of
associates (32) (9) 49
Finance income 3 35 83
Finance expense (2,121) (2,275) (4,978)
Loss before tax (2,352) (10,092) (47,866)
Tax credit 4 330 1,115 998
Loss for the period (2,022) (8,977) (46,868)
Segment capital
expenditure 1,592 3,222 6,401
Segment depreciation and
amortisation 6,507 11,914 56,1343
Segment assets 128,631 195,228 133,595
Segment liabilities 116,912 140,762 120,074
For the purposes of monitoring segment performance and
allocating resources between segments, the Chief Operating Decision
Maker, which is deemed to be the Board of Directors monitors the
tangible intangible and financial assets attributable to each
segment. All assets are allocated to the reportable segment.
* Please refer to note 2 for further details of the restatement
of the prior period. Subsequent to reporting interim results for
the 26 weeks to 28 September 2019, the Group reassessed the
approach to determine the initial right-of-use asset impairment
under IFRS 16. Impairment charges arising from the new impairment
methodology under IFRS 16 have been treated as a transition
adjustment and charged to retained earnings. The prior period
interim accounts have been restated to reflect the impact of this
assessment.
(b) Geographical markets
Sales revenue by Non-current assets
geographical market by
(1) geographical market
Unaudited Unaudited Audited Unaudited Unaudited Audited
26 weeks 26 weeks 52 weeks 26 weeks 26 weeks 52 weeks
ended ended ended ended ended ended
26 September 28 September 28 March 26 September 28 September 28 March
2020 2019 2020 2020 2019 2020
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
UK 29,038 44,660 98,813 61,037 89,451 65,449
Rest of Europe 7,132 9,817 19,584 9,564 17,996 9,749
Asia 10,199 9,595 21,407 3,274 8,312 3,259
North America 2,368 4,620 9,038 1,144 14,842 792
Rest of world 182 179 479 - - -
Total revenue 48,919 68,871 149,321 75,019 130,601 79,249
(1) Revenue by geographical market includes wholesale sales
based on the location of the customer.
(c) Product categories
Leather accessories account for over 90% of the Group's
revenues, of which bags represent over 70% of revenues. Other
important product categories include small leather goods, shoes,
soft accessories and women's ready-to-wear. Net asset information
is not allocated by product category.
8. FORECAST ASSUMPTIONS
The forecast included in the "Current Trading and Outlook"
section is based on the Directors' base case going concern scenario
for the 52 weeks ending 27 March 2021 as set out in Note 3 above.
The forecast is also based on the following assumptions:
Factors within the influence and control of the Directors:
-- There is no material change in the operational strategy of
the Group from the date of this document.
-- There will be no acquisitions or disposals which will have a
material impact on the Group's results.
-- There are no material investments over and above those currently planned.
Factors outside the influence and control of the Directors:
-- There will be no additional material adverse events which
will have a significant impact on the Group's financial results
including any further material disruption due to COVID-19.
-- There will be no changes in interest rates, bases of
taxation, regulatory environment or legislation that have a
material impact on the Group, including in relation to operations
or accounting policies.
-- There will be no significant and sustained weakening or
strengthening of the pound sterling against the currencies of the
major territories in which the Group operates.
.
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