Mulberry boss says ‘rebuild’ is needed after sales fall over half year

The company, which was recently the target of takeover efforts by shareholder Frasers Group, is among firms to have been hit hard by a sharp slowdown in luxury spending.

Mulberry told shareholders that group revenues fell by 19 per cent to £56.1m for the six months to September 28.

It said trading was challenging over the half-year in the face of a “difficult trading environment and uncertain macroeconomic trends”.

Revenues from its wholesale and franchise business dived by 46 per cent to £5.4m as it was particularly affected by partners in Italy and Denmark reducing their orders due to tough conditions.

Elsewhere, sales in its Asia Pacific division slid by 31 per cent to £9.3m as it was impacted by weakness in China and South Korea.

Meanwhile, UK revenues fell by 14 per cent to £31.3m amid “low consumer confidence”.

It also saw pre-tax losses widen to £15.7m for the period, compared with a £12.8m loss a year earlier.

Andrea Baldo, chief executive officer of Mulberry, said: “Though I’ve only been in the role of CEO for under three months, the first-half results illustrate the clear need to reprioritise and rebuild the business.

“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.

“However, with the teams’ efforts on cost-cutting, a strengthened balance sheet, a renewed brand-first approach and a refreshed business strategy – details of which I’ll share in due course – I am confident we are making the right moves to bring Mulberry back to profitability.”

It comes a month after Mike Ashley’s Frasers Group – which owns a roughly 37 per cent stake in the company – ditched plans for a £111 million takeover offer of Mulberry.

Commenting on Mulberry’s half year results, Julie Palmer, Partner at Begbies Traynor, commented: “Unfortunately, Mulberry’s half-year results do not yet show any signs of a recovery for the embattled luxury retailer, with revenues falling 19 per cent and losses widening even further as it awaits the benefits of its turnaround plan.

"The competitive market has not been kind to Mulberry, which has struggled to carve out a significant niche for itself in recent years.

“After rejecting takeover advances from Mike Ashley’s Frasers Group, one of its largest shareholders, Mulberry now needs to prove that it can pull off its plans to reshape the business and return to growth.

“The new CEO has only been in place for a little over three months and he’s focused on costs so it’s encouraging to see the 16 per cent drop in operating expenses as the retailer begins to address its cost base and inventory levels.

“Investors should also be quietly optimistic about the arrival of Andrea Baldo as the new CEO, he has an impressive track record at the likes of Ganni and Diesel which hopefully heralds the start of a new chapter for the iconic UK brand.

“Baldo’s back-to-basics focus on returning Mulberry to its British heritage sounds promising, particularly if it can pivot away from ailing international markets like China. Sadly for Mulberry, it is embarking on its long road to financial recovery against a troublesome backdrop in the UK that is characterised by volatile confidence and higher costs so that will not make life any easier.”