News Column

Mulberry sales and profits slide as handbag prices cut

June 13, 2014

Julia Kollewe,

Mulberry has seen sales slide 15% after it slashed prices on its soft leather bags to win back English shoppers.

Godfrey Davis, the company's executive chairman, returned to lead the business in March and ousted chief executive Bruno Guillon, who had tried to take the brand more upmarket. 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". Its design team has turned its attention to this price range in an attempt to win back middle England shoppers.

In a "sale" on the Mulberry website, prices have been slashed to 770 from 1,100 for many classic Bayswater, Alexa and Del Rey bags.

Mulberry said the new Tessie collection, with a small satchel priced at 495 and a tote costing 595, had been "well received", and is preparing to open a new flagship store in Paris next spring. It will open fewer new stores than last year.

Davis has said that it was a mistake to follow other luxury brands in putting up prices to appeal to high-end shoppers in the Middle East and China, thereby alienating its loyal English customer base.

Davis admitted in April that introducing cheaper bags would hit sales and profits in the short term, but insisted this was necessary to revive the Mulberry brand. Results released on Thursday showed like-for-like sales plunged 15% in the 10 weeks to 7 June. Profits crashed to 14m in the year to 31 March from 26m the previous year, partly caused by costs related to opening nine new international stores. The company also built a second UK factory last June where it created 320 new jobs.

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 left, who was credited for the brand's success in previous years. 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.

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Source: Guardian Web

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