Stock of the day 10/06/2015 – Mulberry Group PLC

Luxury leather goods manufacturer Mulberry Group PLC will be looking for a lending hand(bag) when it announces its latest preliminary statement on Thursday.

Since its £23.60 peak at the start of May 2012 Mulberry has had a rather tough time of it, falling to a low of £5.78 in the middle of October last year after opening 2014 at £9.73. However, 2015 has been slightly better, if not spectacular, following a boost at the end of 2014; after starting the year at £8.20, the stock has gradually crept back up to a current trading price of £9.03 (10/06/2015, IT-Finance.com).


(Source: IT-Finance.com 10/06/2015)

Mulberry hasn’t shown any real signs of recovering its pre-collapse highs, with its string of profit warnings doing significant long term damage to the stock. Its latest, which caused that mid-October low last year, saw Mulberry admit that its wholesale sales wouldn’t see a return to growth until 2015/16.

Yet it could be ready for a turnaround this year. In March the company finally announce its replacement for former CEO Bruno Guillon, after a year of searching. Considering how long it took, Mulberry eventually picked someone in-house, with non-executive officer Thierry Andretta getting the call up to the big leagues. This appointment should bring with it some added stability, alongside some luxury clout given that Andretta has held important roles at LVMH Moet Hennessy Louis Vuitton among others. It will be interesting to see how Mulberry goes forward in this regard, since the failure of attempts to push the brand up-market caused Guillon to leave the company in the first place, with many now wanting a return its more affordable roots.

After the announcement of a first half loss back in December, a trading statement in the middle of April gave Mulberry a 6.6% boost from £8.65 to £9.23, the first real movement since January, after the company announced it was back on track for its full year targets following the release of a new selection of mid-range bags. Investors, therefore, will be looking for any comments that imply a change in sentiment from the expected full year revenue of £147 million, a near 10% drop year-on-year, alongside a 42% decline in adjusted net income to £6.88 million.

Mulberry Group PLC has a consensus rating of ‘hold’ with an average target price of £8.00.

Tuesday’s stock news:

Ahead of its Q1 2015/16 earnings release tomorrow Home Retail Group has jumped over 5% on the promise of some strong results, with investors taking advantage of a cheap price after a 3 week slump. The company is expected to post a 12% increase in adjusted net income to £1010 million alongside a slight rise in revenue to £5.76 billion.

The entire UK supermarket sector was buoyed this morning, despite a flurry of negative news, with Sainsbury’s, Tesco and Morrisons all up around 4%. Sainsbury’s saw its 6th consecutive quarter of declining sales, but the fact that they weren’t as bad as expected meant investors got into the sector at a cheap price after the three tradable supermarkets out of the Big Four suffered losses across the past month.

On the other end of the spectrum, Weir Group has seen its latest losses in the face of the tough oil and gas landscape, falling 2% on the news that orders for that division had collapsed by 34% between January and May.