Fashion house Mulberry mulls an uncertain future as the pandemic pushes it into another loss.
Bath-based bag maker Mulberry has had an embattled 2020, following the dramatic loss of retail footfall through lockdowns, social distancing, and minimal tourism. Chief Executive for Mulberry, Thierry Andretta, located company’s struggles within broader concerns for the luxury market in the UK; ‘British luxury and UK cities face a very uncertain future.’
However today, more concern for Mulberry’s future as it’s stock price fell following announcements of large pre-tax losses and the scrapping of its 2020 full year dividend.
Susannah Streeter, Senior Investment and Markets Analyst, Hargreaves Lansdown, tells IFA Magazine what’s happened to Mulberry, and what the future may hold for the British bag maker.
‘British brand Mulberry had been feeling the pinch even before the pandemic, amid a bun fight for the luxury bag shopper as customers held out for discounts.
‘The firm said it had been swinging towards a profit for the second half of the year, but the turnaround plan went into reverse when lockdown forced its shops to close – pushing revenue down by 29%, leading to a £47.9m pre-tax loss.
‘Since its stores re-opened, business has been brisker than expected and the firm expects losses to be reduced in the second half of the year, but the dramatic decline in footfall in high end shopping districts, hit by the collapse in international tourism is still proving a major headache. Given the uncertain outlook, the group won’t now be paying a full year dividend for 2020.
‘There are bright spots in the business, with a 30% rise in sales in the Asia Pacific region offsetting the 14% decrease in the rest of the world. The pivot to digital sales is also continuing, with online sales up by 69%. Mulberry’s eco-friendly credentials were given a shine by releasing its first 100% sustainable leather bag, which sold out online in 24 hours. The company will need to keep up that momentum as we head into another tough season for fashion retail.’