New Mulberry Strategy Focuses on U.K., Wholesale as Christmas Sales Plummet
LONDON — Mulberry has laid out a back-to-essentials strategy under new chief executive officer Andrea Baldo as the company reported double-digit revenue declines in the key Christmas trading period.
The B Corp British accessories brand has also named a new chief financial officer, Billie O’Connor, to replace Charles Anderson, who will remain at the company until Aug. 1 to help with the handover. O’Connor has previously held finance roles at British retailers including Selfridges, Marks & Spencer and Walgreens Boots Alliance.
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In a trading update, Mulberry said that in the 13 weeks to Dec. 28 group revenue declined 18.3 percent year-on-year. At constant exchange rates it was down 17.1 percent due to the “continuing challenging macroeconomic environment.”
Retail sales declined 16.5 percent, and 15.2 percent at constant exchange rates, with trade in the U.K. down more than 20 percent. The drop in U.K. sales was due partly to “limited outlet and wholesale sales,” Mulberry added.
International retail sales were down 8.7 percent, and 4.6 percent at current exchange, with trade in Asia-Pacific falling nearly 28 percent, and approximately 24 percent at current exchange.
Sales in the rest of the world fared better, growing 11 percent, and nearly 15 percent at constant exchange, buoyed by demand in the U.S. and Europe.
Similar to its peers, Mulberry has been hit by a progressive slowdown in fashion and luxury spending over the past 18 months. It has also been impacted by the cancellation of tax-free shopping in the U.K., its home market, and a growing — and increasingly polished — handbag offer from high street and contemporary competitors.
In response to those headwinds, Baldo and the board have come up with a rejuvenation strategy called “Back to the Mulberry Spirit,” which aims to restore it to profitability “through simplification, brand realignment and enhanced customer connection.”
Baldo wants to restore Mulberry to the “culturally relevant British lifestyle brand,” it once was. It is hard to underestimate just how relevant Mulberry was throughout the 2000s, when Luella Bartley was creating “It” styles for the brand, and Stuart Vevers, and later Emma Hill, were at the creative helm.
Henrietta Gallina, director of the creative studio at Mulberry, said so much has transpired over the last few years “and we’ve had to engage in some profound introspection as we shape the future of Mulberry. What started out as necessary exercise, turned into a deep interrogation and excavation to recover our spirit.
“’Back to the Mulberry Spirit’ represents an unapologetic return to ourself, to realign with the values that have defined us and make us relevant for today. We’re excited to return to our unique sweet-spot of playful ideas, craft, celebrating the best of modern British culture and, most importantly, making products that you fall in love with – and wear to death.”
Over the mid-term, Mulberry said it will be targeting annual revenue of more than 200 million pounds and 15 percent adjusted EBIT margins in a bid to enhance shareholder value. It plans to slash operating costs by about 25 percent on an annualized basis compared with fiscal 2024, which ended last March.
Baldo said that to reach those goals, Mulberry “needs to get back to where we came from. First created by Roger Saul over 50 years ago, it is this Britishness, cultural relevance, creativity and responsible craftsmanship that is so loved by our customers. These strengths, along with our unique price position, sets us apart from the market.”
The business model, he added, needs to be simplified, and that means reprioritizing the U.K. and taking a “channel agnostic” approach. Baldo said he wants Mulberry to “lead with creativity, reignite brand desirability and deepen connections with our customers. We are already acting at pace.”
To wit, the company has forged new wholesale agreements with John Lewis and Flannels, the fashion chain owned by Mike Ashley, one of Mulberry’s largest shareholders. Mulberry also plans to build on its existing Nordstrom partnership, and will roll out to five further stores with the American retailer.
Mulberry has also forged new commercial partnerships with David Jones in Australia and, more generally, plans to restore wholesale and outlet distribution which it had progressively wound down over the past decade.
The company also plans to close 12 loss-making stores in Asia-Pacific, and going forward, there will be a “reduced emphasis” on China.
Mulberry is tweaking its product offer, too, expanding “core icon families” including Islington, Amberley and Bayswater. As part of that more focused product offering, the company will “reduce promotional dependency and maintain the unique price range.”
The brand is also looking to connect better with consumers, leveraging data insights to engage them more effectively and drive demand. In addition, Mulberry wants to improve customer personalization, in-store experiences, and adopt “a more refined” approach to product launches.
As reported, Mulberry has had a particularly tough 12 months.
Last November, the company announced it was cutting 25 percent of head office staff, and seeking to become more agile. 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.
It also raised 10.4 million pounds in fresh funds, and successfully fought off a series of aggressive takeover moves by Ashley.
In November, Baldo said the “challenging and volatile macroeconomic environment 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, I am confident we are making the right moves to bring Mulberry back to profitability.”
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