Mulberry has dramatically narrowed its annual losses as higher sales, reduced discounting and tight cost control boosted its turnaround efforts.

The luxury retailer’s reported pre-tax loss fell to £8.9m in the 52 weeks to 28 March, compared with a restated £32.2m loss the previous year.

Underlying pre-tax losses narrowed to £8m from £24.1m, while the business posted positive underlying EBITDA of £800,000, against a £16.8m loss last year.

Group revenue increased four per cent to £125.5m, with growth accelerating to 11 per cent during the second half as the retailer’s turnaround strategy began to take effect.

Retail and digital like-for-like sales rose nine per cent, while franchise and wholesale revenue jumped 33 per cent to £14.6m following the expansion of partnerships with retailers including John Lewis, Liberty, Flannels and Harvey Nichols.

Mulberry’s gross margin climbed from 67 per cent to 72 per cent as it cut back promotional activity and focused on selling more products at full price.

Operating expenses were reduced 10 per cent to £96.2m despite the retailer continuing to invest in marketing, brand-building and its digital capabilities.

Chief executive Andrea Baldo said Mulberry had “returned the business to growth, significantly reduced our losses and strengthened gross margin through greater full-price discipline”.

Baldo said more than half of the retailer’s UK store and online sales came from returning customers, indicating it was reconnecting with shoppers already familiar with the brand.

The retailer’s product strategy included the return of its Roxanne bag, the introduction of the Boston collection and further development of its Bayswater range.

Mulberry has also appointed Christopher Kane as ready-to-wear creative director and launched campaigns featuring Cynthia Erivo as it looks to broaden its appeal.

Its pre-owned Mulberry Exchange business recorded a 46 per cent increase in sales during the year, helping the retailer reach a younger customer base and expand its circular fashion offer.

Mulberry closed one UK and eight international stores during the period as it reshaped its estate and focused on profitability, particularly across Asia Pacific. It opened one new UK shop and two John Lewis concessions.

Mulberry said trading had continued to strengthen since the end of its financial year.

Group revenue surged 23 per cent during the 13 weeks to 27 June, while retail and digital sales climbed 18 per cent, or 21 per cent on a like-for-like basis.

UK retail and digital sales increased 17 per cent, while Europe and North America recorded rises of 35 per cent and 23 per cent respectively.

Asia Pacific sales fell 28 per cent on a reported basis due to store closures, but jumped 32 per cent like for like. Franchise and wholesale revenue increased 56 per cent.

Mulberry’s net debt fell to £7.4m from £15.1m after it reduced its revolving credit facility borrowings. Its financing arrangements have been extended until July 2028.

It will not pay a dividend as it continues to direct its resources towards rebuilding the business.

Mulberry is targeting annual revenue of more than £200m and an adjusted EBIT margin of 15 per cent over the medium term.

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