Mulberry to cut workforce by 25 per cent amid coronavirus lockdown

‘The shutting of all our physical stores has had, and will continue to have, a marked effect on our business’, says CEO

Luxury fashion brand Mulberry has announced plans to cut its workforce by 25 per cent following a “decrease in demand” during the coronavirus lockdown.

The British heritage label, which is best known for its handbags that can cost more than £1,000 each, said it has launched a consultation on plans to reduce its global workforce of approximately 1,500 staff by a quarter.

The job cuts will span across the business including head office, retail, manufacturing and distribution.

Mulberry said the majority of its stores have remained closed since it first shut sites in March following the outbreak. However, it said it has recently reopened some sites in China, South Korea, Europe and Canada, and will go on to reopen some UK stores on 15 June.

The leather goods retailer added that while digital sales have been “good” during the lockdown, it “cannot fully offset the decrease in demand experienced from store closures”.

Mulberry said the job cuts have been proposed as it expects social distancing measures, lower footfall and fewer tourists to continue to hit revenues in the coming months.

However, the fashion brand added that it expects the economic impact of the outbreak to result in a “gradual” recovery in overall sales.

“We reacted swiftly to manage the impact of Covid-19 and continue to execute a well-developed plan to manage capital, reduce costs and maintain a robust liquidity position,” said Thierry Andretta, the company’s chief executive.

“In spite of the good performance of our sector-leading digital and omni-channel platform, and our global network of digital concessions, the shutting of all our physical stores has had, and will continue to have, a marked effect on our business.”

He continued: “Launching a consultation process has been an incredibly difficult decision for us to make but it is necessary for us to respond to these challenging market conditions, protect the maximum number of jobs possible and safeguard the future of the business.

“We remain confident in the strength of the Mulberry brand and our strategy over the long term.”

Earlier this year, Mike Ashley’s retail empire bought a 12.5 per cent stake in the fashion brand. However, shares in Mulberry fell by 5.6 per cent to 185p in early trading on Monday, PA reports.

The luxury label is not the only fashion retailer to have faced financial struggles amid the coronavirus outbreak.

Last week, Victoria’s Secret, Debenhams, Laura Ashley and Cath Kidston have also been forced to call in administrators, putting thousands of jobs at risk.