British luxury brand Mulberry has announced a recovery strategy in an attempt to reverse its recent downturn. This follows a 17% drop in its share price over the past month and a decline of more than 30% over the past year.
The company’s revenue for the final quarter of the year decreased by 18.3% year on year, fuelled by a 20% fall in UK retail sales and a 27.9% slump in Asia Pacific retail sales, as reported by City AM.
Last year, Mulberry was the subject of two successive takeover attempts by Mike Ashley’s Frasers, but the luxury firm rejected both bids as undervalued and the offer was subsequently dropped due to governance issues.
However, Frasers’ worry that the brand was “going the same way as Debenhams” was echoed by analysts. Russ Mould, investment director at AJ Bell, agreed with the implication that Mulberry “was in a mess.”
Acknowledging its “sub-optimal” performance, Mulberry introduced a new strategy, “Back to the Mulberry Spirit”. The brand outlined three main objectives: simplification, brand refresh, and customer connection.
These goals encompass a focus on the UK and US markets rather than China, enhanced customer personalisation and in-store experience, and a new creative team. “Our new strategy sets out our commitment to turnaround this business and return to sustainable profitability,” said chief executive Andrea Baldo.
“We need to get back to where we came from and return to the spirit of Mulberry.”
“For Mulberry to succeed, the business model needs to be simplified – including re-prioritising the UK and taking a channel agnostic approach – while also ensuring we lead with creativity to reignite brand desirability and deepen connections with our customers,” he added. Billie O’Connor, soon to join Mulberry as its new CFO, expressed confidence in the company’s strategy stating, the turnaround plan is “clear” with “ambition for the future”.
Despite these optimistic statements, Mulberry’s shares saw a drop of 7.69 per cent in early trades.