Mulberry Group PLC New Business Agreement in North Asia (2569R)
08 December 2016 - 7:00AM
UK Regulatory
TIDMMUL
RNS Number : 2569R
Mulberry Group PLC
08 December 2016
Mulberry Group plc ("Mulberry" or "the Group")
New Business Agreement in North Asia
Mulberry Group plc, the English luxury brand, today announces
the signing of an agreement with Challice Limited ("Challice") to
form a new entity to operate the Group's business in China, Hong
Kong and Taiwan. Challice, which owns c. 56% of the Group's share
capital, is under the same ultimate shareholder control as
Mulberry's existing distributor in the region, Club 21.
-- The Group will own 60% of the share capital of the new
company, Mulberry (Asia) Limited ("Mulberry Asia")
-- Mulberry Asia will develop the Group's offer to customers in
the region, benefitting regional and global sales
-- Initial platform to consist of four stores, wholesale and
omni-channel, including Chinese language mulberry.com site
-- Mulberry Asia is expected to be loss-making during its first
two years before moving into profit
THIERRY ANDRETTA, CHIEF EXECUTIVE OFFICER, COMMENTED:
"We are pleased to reach a new business agreement to participate
directly in the North Asia region. The new company will progress
the Group's international strategy of developing its retail and
omni-channel model in a key luxury market where we see significant
growth opportunity."
New Business Structure
The new business will combine the Group's digital and brand
building capabilities with the partner's operational strength and
enable greater flexibility and dynamism in merchandising. Mulberry
Asia will locate its head office in Hong Kong and will manage all
retail, digital fulfillment and wholesale distribution for the
region.
The Group will have a 60% share in the new business with the
remaining 40% owned by Challice. Mulberry Asia will be funded by a
mix of equity and debt with the initial share capital totalling c.
GBP3.2 million, of which the Group's share will amount to GBP2.0
million. Mulberry Asia will be consolidated in the Group's
financial statements.
The current distribution agreement with Club 21 will terminate.
Mulberry Asia will initially consist of four stores (two in China,
one in Hong Kong and one in Taiwan) and wholesale, and will be
supported by the Group's Chinese language mulberry.com site, with
local FX and payment options. A general manager has been appointed
to build a local team.
Subject to a number of practical issues, including obtaining
Chinese trading licenses, Mulberry Asia is expected to be
operational from Spring 2017. The Group anticipates incremental
costs of c. GBP2.0 million during the current financial year,
representing the re-purchase of stock by Mulberry Asia from the
existing distributor, Club 21 and set up expenses. Mulberry Asia is
expected to be loss-making in its first two years before moving
into profit in the medium term. The losses of Mulberry Asia in the
start-up period will be partly offset on consolidation as a result
of the Group's manufacturing profit generated on the sale of goods
to the new business.
The Group expects to directly invest c. GBP3.0 million in
additional regional marketing support over the next two years to
build brand awareness in the region and capitalise on international
tourist flows to the UK and Europe.
FOR FURTHER DETAILS PLEASE CONTACT:
Bell Pottinger
Daniel de Belder
/ Anna Legge 020 3772 2559
Mulberry Investor
Relations
Allegra Perry 020 7605 6795
GCA Altium
Sam Fuller / Tim
Richardson 020 7484 4040
Barclays
Nicola Tennent 020 3134 9801
This information is provided by RNS
The company news service from the London Stock Exchange
END
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December 08, 2016 02:00 ET (07:00 GMT)