Mulberry reports first half loss after sluggish demand

The group’s loss shows a stark contrast to the strong pre-tax profit of £7.2m posted a year prior. In 2014, Mulberry released multiple profit warnings both before and after former chief executive Bruno Guillon resigned from his position.

Mulberry is not the only luxury British retailer to have raised concerns over the outlook for demand in the luxury goods industry. Burberry last month also warned of a “more difficult external environment”. In the global sphere, the slowing Chinese economy and impact on travel from the Ebola virus is driving down demand for the firm’s handbag and travel collections.

During the period, the firm attempted to push a more affordable product range in a bid to win potential customers put off by its higher priced handbags. The move exacerbated revenue losses by decreasing profit margins and alienating customers already familiar with the brand’s pricing structure.

The group’s revenue for the period dropped 17% to £64.7m following the blunt decrease in demand, as retail revenue fell 9% to £45.1m while wholesale revenue slumped 31% to £19.6m.

Meanwhile, Mulberry announced in late November the appointment of former Céline accessories design director Johnny Coca as its new creative director. Coca will be responsible for all Mulberry’s collections, including ready-to-wear.

In the long term, Mulberry’s outlook remains positive following increased investment in its product range and store development plan.

The group has made significant progress in opening stores in North America and Europe during the trading period. As a result, the firm now aims to concentrate on building its sales and operating performance in the 20 stores opened internationally over the past three years.

Mulberry’s current trading figures have shown an “encouraging” turnaround following an 8% jump in total sales during the nine weeks to 29 November. The group said it was confident that these results would continue into the important Christmas period, following a positive consumer reaction after the release of its #WinChristmas video marketing campaign.

Watch the video here:

Mulberry’s chairman Godfrey Davis said: "We have continued to take steps to return the business to growth and sales for the nine weeks to 29 November are encouraging.

We have worked hard to re-engage with our customers and our tongue in cheek Christmas video #WinChristmas has been viewed well over one million times.

After a difficult couple of years, the steps that we have taken to return Mulberry to growth are beginning to bear fruit and looking further forward, we expect to gain further momentum from the appointment of Johnny Coca as our new creative director."

Mulberry’s share price rose 1.98% to 795.3p per share as of 8:24 on Monday