Mulberry continues to face financial challenges, reporting a significant operating loss for the first half of 2024.
- The British luxury brand’s operating loss reached £13.1 million, a notable 25% increase from the previous year.
- Revenue has seen a considerable decline, influenced by uncertain economic conditions impacting consumer confidence.
- In response, Mulberry is implementing strategic operational changes to navigate market volatility.
- The company remains optimistic about overcoming current hurdles with a forward-looking business strategy.
Mulberry, the renowned British luxury brand, announced a substantial operating loss of £13.1 million for the six months ending September 28, 2024. This represents a 25% decline compared to the previous year, highlighting the ongoing financial challenges the company faces.
The reported loss before tax was £15.7 million, marking a 23% drop year-on-year from £12.8 million. During the same period, group revenue fell by 16% to £56.1 million, down from £69.7 million in 2023. These declines are attributed to widespread economic uncertainties affecting consumer spending habits and confidence.
UK retail sales decreased by 14% to £31.3 million, while the Asia-Pacific region experienced an even more significant drop of 31%, resulting in sales of £9.3 million. Additionally, revenue from franchise and wholesale sectors fell by 46% to £5.4 million. Despite these setbacks, digital sales showed resilience, making up 33% of the group’s revenue. These online sales in the UK increased by 6% and now constitute 67% of total UK digital revenue.
The company, which was awarded B Corp certification in September, is actively managing costs to align inventory with expected revenues. Andrea Baldo, appointed CEO in July, expressed commitment to streamlining operations, enhancing margins, and reinforcing the company’s financial position. Baldo noted, “In response to current market conditions, we have taken decisive steps to streamline operations, improve margins, reduce working capital and strengthen our cash position.”
Strategic measures include revising internal team structures and adjusting product, pricing, and distribution strategies. Mulberry is in talks with luxury wholesale partners to ensure its presence aligns with customer shopping trends across various platforms. Baldo emphasized the team’s efforts towards reducing costs, strengthening the balance sheet, and pursuing a brand-focused approach to foster profitability.
During September, Mulberry moved to bolster its financial health by announcing a plan to issue new shares, aiming to raise £10 million, alongside a retail offering of up to £0.75 million targeting existing shareholders. This initiative has reportedly fortified the company’s balance sheet, providing financial flexibility for future developments.
In recent corporate news, Frasers Group showed interest in acquiring Mulberry, initially offering £83 million, later increased to £111 million. However, the proposal was declined by the board, led by the majority shareholder, Challice, who stated that the timing was inappropriate for a sale. The focus remains on enhancing the business’s commercial performance.
Despite current financial setbacks, Mulberry is actively implementing strategic changes to regain profitability and strengthen its market position.
