Cara Delevingne walks the runway for Mulberry
Mulberry has reported the loss in sales as they try to win back customers with more ‘affordable’ handbag line.
The fashion brand has seen sales slide by 15% and the profits for the year to 31 March fell to £14m from £26m the previous year.
The company explained that like-for-like sales in the 10 weeks to June 7 were down by 15%.
To help counteract this, Mulberry have recently launched the new Tessie collection with a small satchel priced at £495 and a tote costing £595, a more affordable take on the popular Willow and Alexa handbags which reach prices of upwards of £1,000.
Godfrey Davis, the company’s executive chairman, returned to lead the business in March and ousted the chief executive Bruno Guillon, who had tried to take the brand more upmarket and put the prices on all of the pieces up.
Mulberry said the last two seasons had focused on bags priced above £1,000, but had lacked "new and interesting products in the key price range of £500 to £800".
Professor Qing Wang of the Warwick Business School comments on the figures: “Despite the runaway success of recent years, Mulberry suffers from a number of weaknesses. The company's sales growth is too concentrated on the UK, Europe and USA. For example, in 2011, sales at its New York and Paris stores grew by 122% and 151% respectively.
“Despite almost half the Mulberry stores being in Asia only a handful are in China, compared to more than 100 Burberry stores in China. Burberry’s sales growth is particularly strong in the Asia-Pacific region, where its goods are sold in 10 times more outlets than Mulberry.
“There is little doubt that Mulberry is currently in a transitional period as it attempts to transform itself from a humble British heritage to a global luxury brand.
“However, the huge price increase last year for its high end products to match its aspired new exclusive luxury status appeared not to have been thought through, as the price increase was not backed up by strong narratives but was purely based on cost considerations.
“It seems to me that the management of Mulberry failed to understand that even with the right ingredients that Mulberry possesses such as fine material, craftsmanship and a ‘made in Britain’ label, the making of a true luxury good requires time and process to distil.
“The latest knee-jerk reaction to reduce the price due to a profit warning will only add to the confusion in the mind of the consumers of the company's brand image as to whether it's an affordable luxury like Coach or an exclusive luxury like Burberry.”
Mulberry said the new spring/summer collection 2015 had been well received by its wholesale customers, but business will take a while to recover and it expects a double-digit decline in wholesale sales this year.
During Guillon's two-year reign sales and profits slumped and Mulberry's creative director Emma Hill, who was credited for the brand's success in previous years, left. She brought in bestselling designs such as the Alexa – a satchel named after presenter Alexa Chung – and the Del Rey, dedicated to singer Lana Del Rey.