Mulberry boss to lower prices and cut jobs in turnaround plan

The new boss of Mulberry has said that he will “right-size” the business and lower the price of its handbags as part of a plan to turn around the struggling British luxury goods seller.
Revenues at the company, which last month rejected a £111 million bid from Mike Ashley’s Frasers Group, fell 19 per cent to £56 million in the six months to September 28. Losses before tax declined to £15.7 million from £12.8 million in the same period.
Mulberry shares closed down 11 per cent, or 13p, to 105p, a fall over the past year of 36.4 per cent.
• The crisis at Mulberry and the tycoons tussling over its future
Andrea Baldo, who took over as chief executive three months ago, said Mulberry’s financial performance was a “call to action for me to act with decisiveness and speed”.
He said he had taken actions to streamline operations, improve margins, reduce working capital and strengthen its cash position. Those steps have included reviewing its internal team structure and store portfolio, altering its prices and distribution, and partnering with more wholesalers “to ensure we are present wherever our customers shop”.
As part of the plan, Mulberry has placed about 85 roles from the 350 staff employed in its head office functions into consultation. Most of the job cuts will come from its head office in Kensington, west London, as well as some corporate roles in Asia.
The group, which employs 1,100 staff, said it did not plan not make any cuts to jobs at its factory in Somerset or in its 120 stores.
Mulberry was founded in Somerset in 1971 by Roger Saul. The company has struggled to compete against bigger international brands, especially since the post-Brexit ending of shopping tax breaks for tourists to the UK. Over the past year it has also suffered amid the global slowdown in spending among the richest shoppers.
Baldo told The Times that macroeconomic challenges were the “big elephant in the room and everybody is affected”. However, he also admitted that Mulberry’s problems were also “self-inflicted”.
The company, he said, had focused too much on expanding into Asia, and forgotten about the UK, its home market. “The focus on Asia is important because the Chinese [sic] is an engine of growth for the industry, but neglecting your own markets exactly puts you in a weaker position. The company has been investing a lot in Asia in recent years, but it’s also where most of the losses are happening.”
Baldo said there would now be more of a focus on its UK business and also on “pockets of growth” in Europe and the US, where it has seen improved trading.
Mulberry is also having a rethink of its distribution strategy, which is likely to result in more wholesale partnerships.
While more retailers have been moving to a direct-to-consumer business model, Baldo believes Mulberry can reach more customers through “selective” wholesalers such as Flannels and Nordstrom in the US.
In terms of products, the new Mulberry boss plans to sell most of its handbags for less than £1,095 — the price of its most popular Bayswater bag — to broaden the struggling brand’s appeal and boost sales.
“In the last four or five years, luxury brands have increased prices dramatically, but that didn’t happen at Mulberry,” Baldo said. “Our core product — the Bayswater — is the same price that we had in 2019. So, I see the opportunity to be the responsible luxury brand that brings the best value for money at that price point.”
Despite its recent troubles, Baldo said he was “very confident about the brand and the unique position that it has, and the fact that we can actually turn this company around and make the brand really great”.
The retailer’s biggest shareholder, Challice, a group controlled by the Singaporean entrepreneur Christina Ong and her husband, rebuffed the proposal. Challice’s 56 per cent stake means it can block any deal.
Frasers is still understood to be seeking a board seat at Mulberry.
Baldo said he would not comment on the dynamic at board level, but said Frasers was an “important shareholder for us” and that both businesses were “aligned on the fact that Mulberry’s performance is not acceptable and we need to change it”.