Dive Brief:
- Mulberry Group LLC revenue was down 19% to 56.1 million pounds, or about $70.9 million, for the first half of fiscal 2024, according to unaudited results reported Tuesday.
- Retail sales were down 14% in the U.K. and down 31% in the Asia Pacific region. Overall international retail sales declined 17%, but the company said in the report that “the reduction in Asia Pacific [was] partially offset by a 2% increase in the Rest of World.”
- Mulberry’s reported loss before tax was 15.7 million pounds for the period, up year over year from 12.8 million pounds in the first half of 2023. However, the company recently underwent an equity fundraise of 10.4 million pounds and increased its debt facilities with renegotiated covenants in an effort to strengthen the company’s balance sheet and provide “financial flexibility to support management’s turnaround plan,” per the release.
Dive Insight:
The company’s newly appointed CEO, Andrea Baldo, said in this week’s earnings release that the first half results indicate the need to reprioritize and rebuild the business.
“We are now working on initiatives to renew the brand’s relevance, initially for UK consumers and then for our international audience,” Baldo said, adding that the company’s response to current market conditions will include streamlining operations, improving margins, reducing working capital and strengthening Mulberry’s cash position.
“This has also meant reviewing our internal team structure to ensure we become a leaner, more agile organisation,” Baldo said. “Additionally, we’ve made strategic adjustments to our product, pricing, and distribution strategies, and we’ve begun discussions with luxury wholesale partners to ensure we are present wherever our customers shop.”
Last month, the board of directors at Mulberry joined its majority shareholder, Challice Limited, in rejecting an unsolicited cash offer from minority shareholder Frasers Group. It was the second bid from Frasers that the Mulberry board rejected in October.
The rejections were not unexpected, following Mulberry chairman Chris Roberts’ comments in a September earnings release and capital raising statement. Roberts said Mulberry’s recent fundraise, along with new executive leadership, would allow the company to navigate a turnaround moving forward, despite recent earnings declines.
“[W]e believe that the combination of the appointment of a new CEO, our new debt facility and the capital raising announced today will put the Group on a firm footing to ensure we are well set up for future growth,” Roberts said.
On Tuesday, Baldo said he planned to provide more details on the company’s new strategic priorities at a later date, but that he was currently optimistic.
“There is no question that our industry is facing a period of significant uncertainty, driven by a challenging and volatile macroeconomic environment that is impacting consumer confidence in several markets, particularly in our home country,” Baldo said. “However, with the teams’ efforts on cost-cutting, a strengthened balance sheet, a renewed brand-first approach and a refreshed business strategy — details of which I’ll share in due course — I am confident we are making the right moves to bring Mulberry back to profitability.”
