Mulberry has reported substantial losses in its half-year financial results, signalling a pivotal time for the luxury brand under new CEO Andrea Baldo.
- The luxury fashion brand’s losses increased to £15.7 million as sales fell 19% to £56.1 million, compared to the previous year.
- CEO Andrea Baldo highlights the necessity to reprioritise and rebuild the brand to enhance its relevance both domestically and internationally.
- Decisive actions are being implemented to streamline operations, improve margins, and strengthen the cash position.
- A recent takeover bid from Frasers Group was rejected, with ongoing concerns about Mulberry’s governance and financial strategy.
In its latest financial update, Mulberry, the renowned luxury fashion company, has disclosed a significant rise in losses to £15.7 million for the 26 weeks ending 28 September. This represents an increase from £12.8 million the previous year, compounded by a notable 19% drop in sales, which now stand at £56.1 million. Such financial results have prompted the newly appointed CEO, Andrea Baldo, to express the urgent need to ‘reprioritise and rebuild the business’. The focus is currently on revitalising the brand’s appeal to the UK market, with plans to extend these efforts internationally.
Amid these financial challenges, Mulberry is taking ‘decisive steps’ to steer the company back on course. Efforts include streamlining operations, adjusting product and pricing strategies, and reviewing internal team structures, which may lead to job losses. These measures aim to improve profit margins, reduce working capital, and bolster the firm’s cash reserves.
The difficulties faced by Mulberry are reflected more broadly within the luxury sector. Earlier this year, another giant, Burberry, reported a 36% drop in profits, highlighting the challenging economic environment impacting high-end retail.
In a separate development, Mulberry recently dismissed a takeover proposal from its second-largest shareholder, Frasers Group, which owns 37% of the company. Frasers offered a revised bid of 150p per share, valuing Mulberry at £111 million. However, the board found the proposal ‘untenable’, largely influenced by the stance of the majority shareholder, Challice, which refused to sell or support the offer. Frasers voiced disappointment at this outcome and raised concerns about Mulberry’s governance and future business strategy.
Despite withdrawing its bid, Frasers has urged the appointment of one of its representatives to Mulberry’s board, indicating persistent interest in the strategic direction of the company.
Mulberry is at a critical juncture as it navigates financial woes and strategic challenges within a tough market landscape.
