Struggling luxury brand Mulberry has announced it will streamline and rebuild the business as its profit continues to fall, signalling possible job cuts.
Mulberry told markets this morning that UK retail sales fell by 14 per cent in the six months to September 28.
Sales in Asia fell 31 per cent, while group sales overall fell by 17 per cent. Revenue at the luxury retailer fell 19 per cent to £56.1m, from £69.7m last year.
Mulberry cut operating expenses by 16 per cent – or £10m – in the half-year, but this was not enough to offset reduced revenue, and the firm reported an underlying loss before tax of £15.3m.
“The first half results illustrate the clear need to re-prioritise and rebuild the business,” chief executive Andrea Baldo said.
Baldo said Mulberry had “taken decisive steps to streamline operations, improve margins, reduce working capital, and strengthen our cash position”.
“This has also meant reviewing our internal team structure to ensure we become a leaner, more agile organisation. Additionally, we’ve made strategic adjustments to our product, pricing, and distribution strategies, and we’ve begun discussions with luxury wholesale partners to ensure we are present wherever our customers shop,” he said.
“Mulberry is an iconic brand. It stands out for its rich heritage and craftsmanship – qualities that our customers recognise and value deeply… Mulberry truly is one of a kind.
“We are now working on initiatives to renew the brand’s relevance, initially for UK consumers and then for our international audience,” Baldo added.
Earlier this month, Mulberry rejected two offers from Mike Ashley’s Frasers group, who wanted to buy the company to “avoid another Debenhams situation”. Frasers lost £150m after Debenhams collapsed in 2021, and holds a 37 per cent stake in Mulberry.
However, Mulberry rejected Frasers’ second offer as “untenable” and Mike Ashley subsequently walked away from its pursuit, citing governance concerns.
Mulberry told Frasers it was “set up for future growth” due to the combination of the appointment of a new chief executive, its new debt facility a £10m capital raising.
“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,” Baldo said.
Mulberry’s share price has fallen by nearly 28 per cent in the year to date.