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Mulberry (MUL) stock soars 21% as firm bags higher sales

13:18, 24 November 2021

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Mulberry store in York, England
Fashion business Mulberry (MUL) reported strong 2021 sales increases – Photo: Purple Marbles / Alamy Stock Photo

Mulberry shares are soaring after the British bag and accessory maker became the latest luxury business to report a strong sales comeback in 2021.

MUL stock was up 21.11% to 365.75p at 12:45 GMT and is trading 53.78% higher than a year ago, though shares are well below historic highs of over 1,000p.

In half-year results to 25 September, the British bag and accessory maker said Wednesday that group revenue returned to pre-Covid-19 levels, increasing 34% year-on-year to £65.7m, while its profit before tax swung from a £2.4m loss to a £10.2m profit, which included a one-off profit of £5.7m from shedding a lease in Paris.

Stores drive recovery

Retail sales were up by 36% in the UK, 23% in Asia Pacific, 38% in China and 57% in the US, which the group attributed to increased demand following Covid-19 lockdown restrictions lifting as well as investment in expanding in Asia.

Digital sales, which represented 29% of overall sales, were lower than in 2020 but higher than in 2019.

The Chilcompton-based group said it expected its gross margin for the second half to be similar to or slightly higher than the 67% reported last year.

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-0.710% 1D Chg, %
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Spread 60.00

‘Strong performance’

Mulberry chief executive Thierry Andretta commented on the results: “Our long-term strategy, namely our innovative and sustainable products made in our carbon neutral Somerset factories, our market-leading omni-channel distribution model, and our expansion into Asia Pacific, has delivered a strong financial performance.”

Alluding to global supply chain issues that have led to worries of Christmas shortages, Andretta said: “The bold decisions we have taken with regards to focussing on our UK production capabilities means that we are well placed for the festive trading period and beyond.”

Other luxury businesses such as LVMH, Richemont and Prada have also seen sales and revenue increase in 2021 ahead of both 2020 and pre-pandemic levels.

Consultancy Bain & Company has called the surge in the luxury goods market this year unprecedented, and forecast that 2021 sales will be well ahead of 2019.

Read more: Luxury stocks make a lucrative comeback

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The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
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