What next for Mulberry’s share price?

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BLACKBERRYthe British luxury handbag brand, said it expects the “robust sales trend” of the first half to continue through the second half, and if that happens it should mean that the group’s turnover for the whole of the year is “moderately ahead”. of current expectations.

This will no doubt appeal to investors who have seen their shares in AIM-listed Mulberry Group (MUL) struggle to rise in recent years. The big question now is whether the shares of the luxury goods group have good value? We should have a better idea of ​​whether or not that’s the case when Mulberry releases its annual results on June 29.

Mulberry certainly seemed to have done everything right on the business front, but its share price performance disappointed. Over the past five years, Mulberry has gone from a loss-making company to a profitable one, but its share price has not kept pace.

In November, Mulberry announced first-half revenue rose 34% year-on-year to £65.7m. Meanwhile, pre-tax profits were £10.2m, compared to a loss of £2.4m a year earlier. Over the same period, Mulberry’s share price fell from 335p to 190p. Today they are back around the 295p mark.

When the annual results are announced next week, long-suffering shareholders should know that despite increased marketing spending in the second half as Mulberry poured money into boosting global awareness of the brand, its cash position still looks solid. Net cash balances at the full year stage are expected to exceed £20m. Gross margins were also maintained.

Of course, in the face of the pandemic and now in the midst of the cost of living crisis, investors have had reason to be cautious, and this is likely to remain the case for some time to come, which could therefore explain the performance disappointing share price.

However, those working in the luxury handbag business clearly don’t see any of this taking on too much shine in this lucrative market. According to a report by Allied Market Research, the global luxury bag market is expected to reach $89.9 billion by 2026.

Mulberry has global brand awareness and a focus on sustainability in mind. It recently launched its very first carbon neutral bag. Long-suffering shareholders are no doubt hoping the latest set of annual results will give Mulberry shares something of a luxury factor.

Five-year performance

(%)
As of June 21
2017-2018 2018-2019 2019-2020 2020-2021 2021-2022
Mulberry Group PLC Ord 5P -31.51% -63.34% -24.2% 50.62% -3.28

Past performance is not a reliable indicator of future returns

Source: FE from 21.6.17 to 216.22 Basis: Total returns in GBP. Excludes upfront costs.

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