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Mulberry sees profits dive after disastrous year

Mulberry’s profits almost halved last year after failed upmarket move

Mulberry, the British luxury goods maker famous for its celebrity-named bags, has vowed to win back disenchanted customers with cheaper products.

The struggling leather brand revealed a 46 per cent tumble in profit to £14 million for the year to April. Sales for the 10 weeks to June 7, in stores open longer than a year, tumbled 15 per cent.

Godfrey Davis, the executive chairman who stepped in to run the brand when chief executive Bruno Guillon left in March after three profit warnings, said its launch of a new line of cheaper bags, called Tessie, two weeks ago had made an “incredibly good start”.

Mulberry was heavily criticised for going too upmarket under Guillon and pricing out its core British customer in pursuit of wealthy overseas shoppers.

Davis said: "We are a luxury brand but we try to be fair value for money.” He said that Mulberry had lacked “new and interesting products in the key price range of £500 to £800”. But he insisted that “this is fine tuning, not a U-turn”.

He said “some of our customers got the wrong impression” and he now hopes the Tessie line will win back alienated fans.

The group is still searching for a creative director after Emma Hill quit last year. She was credited with introducing its bestselling “It bags” such as those named after presenter Alexa Chung and singer Lana Del Rey.

Davis said the group wants a creative director before it gets a new chief executive and he plans to run the brand for a while to “restore the business to growth.”

He said the £500 to £800 bags will account for 40 per cent of its entire range — up from less than 24 per cent a year ago — adding that last year, bags selling for more than £1000 made up more than 54 per cent of the collection.

They now make up less than 30 per cent. A surge in sales for brands selling bags at around £300 caused analysts to be concerned that Mulberry is still too expensive but  Davis added: “We think our price positioning is good.”