It sounds like the profit warning Mulberry issued in October was definitely warranted: On Thursday, the company reported a pre-tax loss of £1.1 million (~$1.7 million) for six months ending Sept. 30, compared to a pre-tax profit of £7.2 million for the same period last year. Mulberry describes the loss as "in line with expectations" and says it reflects "lower sales, the increase in costs associated with new stores opened this year and last year (£2.8 million) and the lower gross margin."
Fortunately, things are looking up as the UK-based luxury brand's sales have improved over the past few weeks. Retail revenue is up 8 percent compared to last year for the nine weeks ending Nov. 29, driven largely by online sales, which are up 18 percent.
Mulberry has done a lot of course correcting over the past six months. Instead of trying to push its price points even higher, it launched a lower-priced line of bags called the Tessie, as well as a line done in collaboration with human publicity-generator Cara Delevingne. A few of Mulberry's spring 2015 bags, including the pretty affordable Blossom collection, which includes totes, pochettes and small leather items, hit stores last month. The company called response to these products "encouraging." Mulberry says it has also "worked hard to re-engage with our customers by reinforcing our core brand values," and points to the tongue-in-cheek Christmas video it recently launched (see below), which has gotten over a million views, as one example.
And just in the past week, the company made two key hires: Celine's Johnny Coca, who has been named creative director (a role that hasn't been filled since June 2013), and fashion consultant Julie Gilhart, who joins as non-executive director.
"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," said Chairman Godfrey Davis in a statement.
Coca won't start until July, but the current holiday shopping period will be crucial for the company. Hopefully it can make up some of its losses there.