Mulberry raises £20m from shareholders amid £31.8m FY loss

British lifestyle brand Mulberry has unveiled a £20m fundraising in a bid to support its turnaround strategy, after reporting a £31.8m loss before tax in the year to 29 March due to revenues falling in a challenging luxury market.  

Group revenues dropped 21% to £120.4m in the period, with UK retail and digital sales down by 20%, while the North America revenues slipped just 1% as it was helped by new Nordstrom partnerships. 

As a result, Mulberry saw its underlying loss before tax widen to £23.7m from £22.6m, and its gross margin fell to 66.8% from 70.1%. 

The fundraising will be carried out through the issue of £20m of convertible loan notes to major shareholders Challice and Frasers Group. The notes, which require shareholder approval at a meeting on 30 July, can convert into shares at 150p each – a 53.8% premium to the closing price on 9 July. 

Challice and Frasers, which together own 93.5% of the company, have pledged to vote in favour.

According to Mulberry, the new funds will support investments aimed at achieving its medium-term targets of over £200m in annual revenues and a 15% adjusted EBIT margin. 

Andrea Baldo, chief executive of Mulberry, said: “We have made significant progress in laying the foundations for Mulberry’s turnaround. Since launching our ‘Back to the Mulberry Spirit’ strategy in January, we have acted at pace to simplify the business, reduce costs, and refocus on our most profitable channels and markets.

“We welcome the additional capital injection from both our major shareholders, which will enable us to keep moving with pace – investing in product, digital, and international growth to deliver long-term value.”

During the year, Mulberry launched its ‘Back to the Mulberry Spirit’ strategy, which included simplifying operations, closing 12 loss-making stores in Asia, signing new agreements with UK department stores, and repositioning the brand through a creative relaunch and refreshed product lines.

The company also appointed James France, a senior Frasers executive, as a non-executive director starting from 30 July. A relationship agreement has been signed to regulate his appointment.

In current trading, group revenue for the nine weeks to 1 June was down 18% year-on-year, but full-price sales in the UK and North America rose, and the direct-to-consumer digital channel continued to outperform the prior year.

Baldo added: “Whilst the external environment remains challenging, we are energised by the opportunities ahead and remain focused on restoring profitability and achieving our medium-term targets.”