Mulberry reports significant financial losses in the first half of the year.
- Losses have increased from £12.8m last year to £15.7m this year.
- CEO Andrea Baldo identifies the necessity to refocus and rebuild the brand.
- Strategic moves include streamlining operations and reviewing team structures.
- Frasers Group’s takeover bid was rejected amidst governance concerns.
Mulberry, a renowned luxury brand, has reported significant financial losses, with figures climbing to £15.7 million for the 26 weeks ending on 28 September. This represents an increase from the £12.8 million loss recorded in the previous year. The company’s sales have also plummeted by 19%, reaching only £56.1 million.
Andrea Baldo, who has recently taken on the role of Chief Executive Officer, addressed the disappointing financial results. He emphasised the pressing need to reprioritise and rebuild the business. His approach involves initiatives aimed at renewing the brand’s relevance, with a primary focus initially on the UK market before expanding to international audiences.
In light of challenging market conditions, the retailer has implemented decisive measures to enhance financial stability. These include streamlining operations, improving profit margins, reducing working capital, and fortifying the company’s cash position. Additionally, an internal team structure review has been instigated, potentially leading to job reductions. Strategic adjustments have also been made to product offerings, pricing, and distribution strategies.
The difficulties faced by Mulberry are reflective of broader struggles in the luxury market. Earlier in the year, Burberry experienced a 36% profit drop due to economic challenges. Moreover, Mulberry recently fended off a takeover attempt by Frasers Group, one of its major shareholders led by Mike Ashley. Frasers had proposed a revised cash bid of 150p per share, valued at £111 million. However, the board dismissed the offer following the majority shareholder Challice’s decision to retain its stake in Mulberry.
Concerns over Mulberry’s governance were expressed by Frasers after their failed bid, citing the lack of a clear commercial plan amidst increasing market pressures and questioning the financial health of the company. Despite withdrawing their offer, Frasers has called for the inclusion of a representative on Mulberry’s board.
Mulberry is committed to overcoming its financial hurdles through strategic restructuring and operational enhancements.
