LONDON — Mulberry is streamlining, cutting 25 percent of head office staff, and seeking to become more agile as it reported a 19 percent decline in revenue for the six months ended Sept. 28 to 56.1 million pounds, and a pre-tax loss of 15.7 million pounds.
The brand had a busy start to the fiscal year, taking on a new chief executive officer in Andrea Baldo, raising 10.4 million pounds in fresh funds, and successfully fighting off a potential takeover bid from substantial minority shareholder Mike Ashley.
Like many other fashion and luxury brands, Mulberry has been battling declining sales and profits due to a lack of appetite for luxury goods in China and elsewhere. Mulberry has also been hit by the cancellation of tax-free shopping for foreign tourists in the U.K., and a series of inflationary pressures.
A bag from the Mulberry x Eleventy collaboration, which launched on July 15.
Courtesy
On Tuesday, together with the results announcement, Baldo made his debut address as CEO, saying the time had come to “reprioritize and rebuild the business.”
Baldo said he is working on “initiatives to renew the brand’s relevance, initially for U.K. consumers and then for our international audience” and is taking decisive steps to streamline operations, improve margins, reduce working capital and strengthen the company’s cash position.
Mulberry plans to lay off 25 percent of its head office workforce, or around 85 roles. Layoffs will not impact retail staff or workers at the company’s Somerset, England, factories. Baldo is also making “strategic adjustments” to Mulberry’s product, pricing and distribution strategies.
“There is no question that our industry is facing a period of significant uncertainty, driven by a challenging and volatile macroeconomic environment that is impacting consumer confidence in several markets, particularly in our home country,” Baldo said.
“However, with the teams’ efforts on cost-cutting, a strengthened balance sheet, a renewed brand-first approach and a refreshed business strategy, I am confident we are making the right moves to bring Mulberry back to profitability,” he added.
The Mulberry holiday display in Covent Garden in 2023.
Courtesy of Mulberry
The overall drop in revenue came from falling sales in Mulberry’s main geographies. Sales in the U.K., Mulberry’s home market, were down 14 percent while Asia-Pacific fell 31 percent. Total international retail sales, including Asia-Pacific, were down 17 percent.
Mulberry said the 15.3 million pound underlying loss before tax was a result of reduced revenue and margin, which was partially offset by lower operational costs.
The equity fundraising of 10.4 million pounds, underwritten by majority owners Christina Ong and Ong Beng Seng, and increased debt facilities will both reinforce the group’s balance sheet and provide financial flexibility to support management’s turnaround plan, Mulberry said.
Mulberry’s Year of the Dragon bag design marking Lunar New Year 2024.
Mulberry reported some highlights in the quarter, noting that full-price sales represented 78 percent of retail sales, while collaborations with Rejina Pyo and Eleventy “drove further global awareness” of the brand.
The company also achieved B Corp Certification for sustainability in September.
Looking ahead, Mulberry said the wider macroeconomic environment, including ongoing inflationary pressures, “continue to present uncertainty and challenges.” In response, it will continue to keep a lid on costs and manage inventory levels.
Mulberry added that trading for the full financial year is expected to be weighted toward the second half given the upcoming festive trading period.
