Mulberry says sales recovering after disastrous move into high-end luxury market

The group's shares down 70% after plans to sell expensive £2000-plus bags backfired

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The Independent Online

The maker of Cara Delevigne and Alexa Chung-inspired handbags has claimed it has finally turned a corner as sales picked up after a dire 18 months.

Mulberry's first half results revealed an as expected £1.1 million loss - down from £7.2 million the previous year - and overall sales down 17 per cent to £64.7 million.

But executive chairman Godfrey Davis said that after a string of profit warnings its new strategy to “return Mulberry to growth” was “beginning to bear fruit.”

For the nine weeks to the end of November total retail sales were up 8 per cent and online sales jumped 18 per cent compared to the same period last year.

Davis said the run up to Christmas and January was key for the brand but sales were “encouraging”.

The group's shares crashed 70 per cent from a 2012 peak when an ill-fated focus on very expensive £2000-plus bags backfired.

Chief executive Bruno Guillon left the group and Davis returned to run the luxury leather brand and introduced more bags at its “entry”price level of around £500.

Davis said sales of these bags - including the Tessie and its Blossom tote - were strong while its more expensive Cara Delevigne bags were also selling well.

Bags at £500 and under made up 5 per cent of products, those between £500-£800 were around 40 per cent of range, bags in the £800-£1000 were about a quarter of its collection and those at a £1000 or more were nearly a third and Davis said this split will be maintained. Around 50 per cent of its bags are made in England.

He said its “tongue in cheek”  #WinChristmas Christmas video had been viewed 1.25 million times which is “well above anything we have done before” and the company had “worked hard to re-engage” with its customers after many felt alienated after its perceived move upmarket.

Last week it announced it had finally hired a creative director to replace its star designer Emma Hill who quit last year. Céline accessories designer Johnny Coca will join next year.

Davis said: “My objective is to retain this steady growth so when he joins he can take us on our next step forward.”

Fiona Cincotta, a senior market analyst at Finspreads.com, said: “Mulberry showed signs of improvement in its first half, with increases in sales directly related to the handbag maker ditching its failed attempt to become a ‘millionaire-bracket’ luxury brand. The market will also take heart from the fact that recent sales uplift largely came from Its new handbag ranges which seek to maintain a luxurious lustre at a fraction of previous prices.”

She added: “Another sign that the company is on the path to recovery is that it has got a grip on the much-feared gross margin slippage."

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