New bag design costs clobber Mulberry but sales surge amid weak pound
Luxury handbag maker Mulberry sank to a half-year loss after investing in new products, but tourists taking advantage of the weak pound to snap up bargains helped send sales surging.
The group said UK like-for-like retail sales rose 7% in the six months to September 30, boosted by a luxury spending spree sparked by sterling's sharp fall since the Brexit vote.
Half-year results showed Mulberry slipped into the red with losses of £500,000, against pre-tax profits of £100,000 a year earlier after it splashed out £1 million on new designs.
The group has launched the first collection under recently-hired creative director Johnny Coca, with nine new bags - including a revamp of its best-selling Bayswater design.
Mulberry chief executive Thierry Andretta said the new range has been "well received by our existing customers and a new audience".
But h e added: " The UK and global outlook has become more uncertain since we last reported; however, we are in a good position to continue to build our business."
Total group-wide like-for-like retail sales lifted 7% in the first half, with international sales up 10%.
Mulberry said that, while tourist spend remained strong since the first half, UK customer demand had "softened" in recent weeks, with total like-for-like retail sales growth easing back to 3% in the 10 weeks to December 3.
The group has staged a bounce-back over the past 18 months after seeing profits hammered as it attempted to move upmarket and compete with the likes of Gucci and Dior.
Sales have recovered strongly after it moved to cut prices.
The group, which has 67 stores globally, also announced alongside half-year results a deal to grow in Asia with its majority shareholder - Challice, a company run by Singapore billionaire Christina Ong and her family.
They will form a new venture to run Mulberry's business in China, Hong Kong and Taiwan.