Mulberry Group Reports Revenue Growth and Positive Underlying EBITDA Amid Successful Brand Turnaround

Record Gross Margin Growth Demonstrates Pricing Discipline and Brand Strength

Mulberry's gross margin expanded by 510 basis points to 71.9% for the 52 weeks ending 28 March 2026, reflecting a strategic shift toward full-price sales and reduced discounting. This margin expansion occurred alongside revenue growth, indicating the brand's repositioning allows stronger pricing power without dampening customer demand. The company attributes this improvement to enhanced commercial discipline in promotions and a deliberate move away from prior discounting practices.

This gross margin improvement is strategically important for Mulberry's sustainable profitability path. Management highlights that prioritizing margin over volume signals confidence in brand equity and customer engagement. Cost of sales decreased by a34.7 million despite a a35.1 million revenue increase, underscoring improved product mix and pricing execution. This metric is crucial for investors assessing Mulberry's ability to maintain luxury positioning at scale.

Operating Expense Cuts and Strategic Investment Reallocation

Operating expenses fell 10% to a396.2 million from a3107.4 million the prior year, a a311.2 million reduction achieved through disciplined cost management. Importantly, this was accomplished while maintaining or increasing investments in marketing, brand initiatives, and digital capabilities, including e-commerce platform upgrades and customer relationship management enhancements. The company describes this as operating a "better business" through simplification, productivity gains, and aligning costs with strategic priorities.

Underlying operating expenses (excluding SaaS costs) declined by a31.8 million to a393.6 million, indicating the majority of cost savings stem from structural simplification rather than temporary freezes. Resources were shifted from lower-priority areas toward product development, customer experience, and digital infrastructure. This operational restructuring suggests Mulberry has moved beyond reactive cost-cutting to strategic investment allocation in its turnaround.

Product Innovation and Brand Engagement Fuel Customer Growth

In FY26, Mulberry focused on launching heritage collections alongside new product introductions, achieving notable success with signature and limited-edition items. The Roxanne handbag family’s return under new creative leadership received strong customer response, while the Bayswater Limited Edition sold out rapidly, signaling renewed brand appeal. The Boston family and expanded Scotchgrain range also contributed to increased customer engagement and full-price acceptance. These launches highlight the company’s emphasis on product excellence and heritage over volume-driven discounting.

More than half of UK Retail and Digital sales in FY26 came from returning customers, demonstrating effective brand reconnection with its existing base. Additionally, pre-loved sales increased 46% through the Mulberry Exchange circular business, attracting younger customers and reinforcing sustainability messaging. These results indicate the product-led strategy is driving measurable improvements in customer acquisition and engagement across demographics.

Creative Leadership Appointment and Enhanced Campaigns

Mulberry bolstered its creative team by appointing Christopher Kane as Ready-to-Wear Creative Director, marking an "exciting new chapter" for the brand. This move signals ambitions to expand creative expression beyond handbags and leather goods, potentially broadening market reach. The appointment reflects confidence in the turnaround’s stability to support creative growth.

Brand campaigns improved notably, with the Cynthia Erivo collaboration for the Roxanne launch and the 'Rooted in Craft' campaign at FY27’s start receiving positive market feedback. These efforts aim to reconnect emotionally with existing customers and attract new audiences by blending heritage with contemporary cultural relevance. Emphasizing British craftsmanship aligns with luxury sector trends favoring transparency and provenance, offering competitive differentiation in markets valuing responsible production.

Retail Footprint Optimization and Wholesale Growth

In FY26, Mulberry closed nine stores (one UK, eight international) while opening three new locations, including a flagship UK store and two John Lewis partnership sites. This net reduction prioritizes profitability over expansion, with closures guided by impairment analysis. The company recorded a a30.9 million credit from store closures in FY26, improving on the prior year’s a30.5 million credit, reflecting efficient exit management. This approach enhances capital efficiency and focuses investment on higher-return locations.

Franchise and wholesale revenue rose 33% to a314.6 million from a311.0 million, driven by partnerships with premium retailers such as John Lewis, Liberty, Flannels, and Harvey Nichols. These partnerships enable distribution without heavy capital investment, expanding customer reach and geography. Management reshaped the Asia Pacific business to prioritize profitability over volume, indicating a willingness to sacrifice short-term revenue for sustainable margins in that region.

International Sales Growth and Like-for-Like Acceleration

Retail and Digital like-for-like sales increased 9% in FY26, with momentum accelerating in the second half. This trend continued into FY27, with all regions delivering double-digit like-for-like growth in the 13 weeks to 27 June 2026. UK Retail and Digital sales rose 16% like-for-like, Europe 33%, and North America 27%. Asia Pacific showed a complex picture: absolute sales declined 28% due to store closures, but like-for-like sales grew 32%, indicating the decline reflects footprint reduction rather than trading weakness.

The broad-based like-for-like growth suggests Mulberry’s brand refresh resonates domestically and internationally. The acceleration from low single-digit growth in H1 to double-digit in H2 reflects cumulative impact of product launches, campaigns, and operational improvements. Sustained momentum into FY27’s first quarter signals durable improvements supporting the company’s medium-term revenue growth ambitions beyond the UK. Retail and Digital revenue grew 21% like-for-like in Q1 FY27.

Sustainability Advances and Circular Economy Initiatives

Mulberry reported significant progress on environmental and social sustainability in FY26, integrating these factors into its long-term business model. UK greenhouse gas emissions (scope 1 and 2) declined 23% year-on-year, reflecting operational efficiencies and reduced store count. The company increased sourcing from transparent, responsible tanneries, meeting consumer demand for supply chain accountability. The Mulberry Exchange circular platform grew pre-loved sales by 46%, attracting younger customers with accessible price points and reinforcing sustainability commitments.

Embedding sustainability and circular initiatives into financial metrics indicates management views these efforts as drivers of customer loyalty, brand differentiation, and demand sustainability rather than mere compliance. The company upheld living wage standards across its supply chain despite cost pressures, demonstrating values-driven governance. These developments may appeal to ESG-focused investors, enhancing shareholder appeal as profitability nears.

Balance Sheet Strengthening and Financing Flexibility

Mulberry bolstered its financial position in FY26 through a a320 million convertible loan note from its two largest shareholders, enhancing liquidity and strategic flexibility. This shareholder backing reflects confidence in the turnaround and medium-term outlook. The company also renewed and extended all banking facilities through July 2028, eliminating near-term refinancing risks and enabling operational certainty.

This improved financing position contrasts with prior-year refinancing uncertainty. The extended facility maturity and shareholder loan provide a multi-year runway to execute strategy and pursue targets of revenues above a3200 million and a 15% adjusted EBIT margin. Inventory levels were carefully managed ahead of FY27, described as "good quality inventory at a controlled but relevant level," indicating lessons learned from past overstocking and positioning for demand-driven replenishment.

Medium-Term Targets and Strategic Outlook

Management reaffirmed medium-term goals of exceeding a3200 million in revenues and achieving a 15% adjusted EBIT margin, representing significant progress from FY26’s a3125.5 million revenue (about 63% of target). This implies approximately 60% revenue growth over an unspecified timeframe, requiring sustained gross margin strength and operating expense leverage to expand EBIT margins.

Chief Executive Andrea Baldo highlighted strategic milestones for FY27 and beyond, including the launch of Mulberry by Christopher Kane, participation in London Fashion Week, and festive season product releases. These initiatives emphasize product-led growth, creative momentum, and seasonal marketing. While acknowledging ongoing macroeconomic challenges, especially in the UK, management expressed confidence in internal execution and strategic direction.

Strong FY27 Start and Sustained Trading Momentum

Early FY27 trading results show significant improvement over the prior year, with group revenue for the 13 weeks to 27 June 2026 up 23% year-on-year. Retail and Digital revenue increased 18% reported and 21% like-for-like, with "all regions delivering like-for-like double-digit growth." Franchise and Wholesale revenue surged 56% year-on-year, reflecting improved wholesale partner sell-through and new partnerships such as John Lewis.

The higher reported revenue growth versus like-for-like (23% vs. 21%) indicates positive contributions from new store openings and wholesale expansions. Management stated FY27 trading is "in line with the Board's expectations" and remains focused on rebuilding gross margin and profitability, confirming guidance alignment and execution discipline. The sustained momentum from FY26’s second half into FY27’s first quarter suggests operational improvements are durable.

Underlying EBITDA Turnaround and Path to Cash Generation

Mulberry achieved a positive underlying EBITDA of a30.8 million in FY26, a a317.6 million turnaround from a a316.8 million loss the previous year. This measure excludes non-cash depreciation, amortisation, and IFRS 16 lease impacts, indicating sufficient operating cash contribution to cover cash costs—a critical milestone for sustainable operations.

Underlying EBITDA is the key metric for monitoring banking covenants and financial targets, reflecting lender and shareholder focus on EBITDA progression. The improvement, achieved alongside brand and digital investments, demonstrates combined revenue growth and cost discipline driving operational leverage. Continued EBITDA gains enhance the company’s prospects for cash generation and eventual net income profitability, bolstering investor confidence in the turnaround’s durability.