Mulberry, the luxury leather goods brand, has reported a decline of -1% in its results from April to the end of September. The drop in sales in the United Kingdom, caused by the economic context, has contributed to this decrease in turnover, which reached £64.9 million. This is not a positive sign for the specialized brand in leather goods.
In its half-yearly report ending on October 1st, Mulberry announced a decrease in sales of -1%, reaching £64.9 million. The summer season had a significant impact on the brand, with a decrease of -9% in turnover. However, the first quarter of the fiscal year ended with a growth of +7%.
Unfortunately, this decline has resulted in a pre-tax loss of £3.9 million, compared to a pre-tax profit of £10.2 million in the previous year. The gross margin stood at 71%. The distribution channels of digital and own stores experienced a decline of -15% and -3% respectively, while franchise and wholesale sales increased by +32%.
The main reason for these mixed performances is the decline in turnover in the United Kingdom, which is Mulberry’s flagship market. The territory recorded a decrease in revenues of -10%, reaching just over £34 million. The digital channel was particularly affected, with a decrease in sales of -24%, as more customers returned to physical stores after the COVID-19 pandemic. Despite this return, physical retail ended the semester with a decrease of -2%.
In contrast, sales in the Asia-Pacific region slightly increased by +1%. The digital growth in this region was boosted by +23%, despite the health restrictions in China. Mulberry’s other regions experienced a decline of -3% in sales, with a +8% increase in digital channel sales and a -13% result in physical stores.
Thierry Andretta, the CEO of Mulberry, reassured stakeholders that the brand is confident in its ability to execute its strategy and continue to invest across the group for future growth, despite the challenging economic and geopolitical context. The brand stated that the past eight weeks have seen an improved turnover compared to the previous year. Additionally, Mulberry could benefit from the increased interest in handbags, as a report by Kantar and Altiant revealed that 34% of luxury buyers intend to increase their spending on luxury leather goods in 2023.
Useful links:
– BBC: Mulberry’s sales slide as Covid curbs hurt UK trade
– Reuters: Mulberry’s half-year sales slip as store visits fall
