Asia is turbo boosting luxury bag maker Mulberry’s profits

Luxury fashion brand Mulberry saw profits jump due to expansion in Asia, a rise in digital sales, and increased efficiencies, the group reported on Wednesday.

Profit before tax was up 21% at the end March 2017, compared to a year previously. Sales from digital grew by 19%, and now make up 15% of the Group’s revenue. Total revenue is up 8% to £168.1 million, compared to £155.9 million in 2016.

The brand also created a new entity, Mulberry Asia, to manage its business in China, Hong Kong and Taiwan, with stores opening in Shanghai and Hong Kong earlier in the year.

“During the year we have made good progress. Our sales and profits are growing, enhancing our strong cash position. We have advanced our international growth strategy with a new partnership in Asia and the continued expansion of our omni-channel offer in key markets,” said CEO Thierry Andretta.

The rise in profit comes despite fears, over the past two years, that luxury brands expanding in Asian markets might suffer from slowing growth in China. The group also seems to have recovered from having slipped into the red in December 2016: despite upfront costs caused by expanding in Asia, Mulberry reported it now has no debt. Despite the good news, Mulberry’s shares dropped 2% as of 09:05 a.m. (BST) on June 14.

In the UK, two stores (Covent Garden and Bicester) were relocated, while two closed in North America (in New York and Washington), to focus instead on digital sales.

“Looking ahead, we will continue to invest in advancing our international development and increasing Mulberry’s relevance to our customers’ rapidly evolving lifestyle,” said Andretta.