Despite fears to the contrary, there seems little sign that overseas consumers are losing their appetite for luxury goods, at least as far as handbag maker Mulberry is concerned.
The company said half year profits jumped 231% to £15.6m – no, that’s not a mistake. Revenues rose 62% to £72.3m, with international sales more than doubled to £29.4m. During the period it opened a flagship store in New York and five new shops in the Asia Pacific region. An expansion of its factory in Somerset created 60 new jobs.
On the outlook it said sales for the last ten weeks were up 14%, with spring/summer orders up 29% compared to last year. Nine new stores are planned for the second half, but the company said the future could be more challenging, given the constraints on consumer spending. Chief executive Godfrey Davis said:
Our strategy to focus on international expansion continues to bear fruit. Against the backdrop of economic uncertainty, Mulberry continues to build market share internationally and we remain cautiously optimistic about the future prospects of the business.
The tightly held shares added 36p to £15.30 and analysts were positive on the outlook. John Cummins at Altium Securities said the results were highly creditable:
The group remains underrepresented in most of the largest luxury goods markets globally, with a focussed strategy in place to grow its current footprint through retail, wholesale and online channels significantly over the next few years. Following the results, we maintain our buy recommendation and £20 share price target, providing 37% upside from current levels.
Panmure Gordon was also a buyer with the same price target. Analyst Philip Dorgan said:
Mulberry’s interim results are comfortably ahead of our forecasts and the quality of earnings is significantly improved with a much enhanced reach and spread of business. However, Mulberry is engaged in a marathon, not a sprint, and we expect continued significant marketing expenditure to ensure that its global opportunity is fully grasped over many years. Together with the parlous state of global markets, this explains why we are leaving our forecasts unchanged.
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