Staff at Mulberry are braced for job cuts after the beleaguered British luxury handbag maker reported that half-year sales slumped by almost a fifth and losses had widened.
The company, which last month rejected a £111m bid from 37% shareholder Mike Ashley’s Frasers Group, reported a 19% fall in revenues to £69.7m in the six months to the end of September. Losses widened by 23% to £15.7m.
Mulberry installed Andrea Baldo as its new chief executive in September and on Tuesday he said would review the company’s team structure to a make “a leaner, more agile organisation”, signalling job cuts were imminent.
“Though I’ve only been in the role of chief executive for under three months, the first-half results illustrate the clear need to reprioritise and rebuild the business,” Baldo said. “We are now working on initiatives to renew the brand’s relevance, initially for UK consumers and then for our international audience.”
He said that sales in the UK, Mulberry’s largest market accounting for more than 60% of total revenues, continued to be affected by low consumer confidence.
Total UK revenues fell 14% year on year to £31.2m; store sales fell 17% and online sales were down by 8%.
In Asia Pacific, sales slumped by almost a third, down 31% to £9.3m, as revenues in China and South Korea fell 52% and 29% respectively.
Sales across the rest of the world, which includes Europe and the US, grew by 2% to £10.2m.
Baldo, who has previously worked at the fashion brands Maison Margiela and Marni and was most recently the chief executive at Ganni, said he intended to complete a strategic review of the business next month.
“In response to current market conditions, we have taken decisive steps to streamline operations, improve margins, reduce working capital and strengthen our cash position,” he said.
“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.”
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Mulberry, which was founded in Somerset in 1971 by Roger Saul, has about 1,400 employees.
Last month, the company rejected an increased offer for the business from Mike Ashley’s Frasers Group as “untenable”.
The retailer’s biggest shareholder, Challice, a group controlled by the Singaporean entrepreneur Christina Ong and her husband, was quick to rebuff the proposal, saying it had no interest in selling its shares. Challice’s 56% stake means it can block any deal.
Frasers Group subsequently walked away from its pursuit of Mulberry and criticised management, saying it was “concerned about governance”, as market conditions put the company “in a very difficult financial position”.
