The past year has been a difficult one for Mulberry. It spent much of the 12 months ending March 31 trying to rebound from a period of steep sales decline — the result of former CEO Bruno Guillon's attempts to bring the UK-based brand more upmarket by introducing prohibitively expensive bags.
A big part of the current leadership team's strategy has been to do the opposite, introducing handbags at a lower price point to hit a sweet spot with its once-loyal customers. For spring 2015, for instance, 66 percent of bags were in the £500-£1,000 range, versus 45 percent a year earlier. Based on the company's preliminary full-year earnings results, posted Thursday, that's working.
Total sales amounted to £148.7 million (about $230 million), down 9 percent for the year. Profits before tax declined 74 percent for the full year to £4.5 million ($7 million), which was slightly ahead of expectations.
Retail sales (i.e., sales through Mulberry's own stores) are particularly important for Mulberry right now because the company's wholesale sales are down 29 percent. While retail sales declined by 9 percent in the first half of the year, they increased by 9 percent in the second half, resulting in a 1 percent overall increase for the year. The company says it expects its wholesale business to stabilize in the coming year.
Going forward, the company said it's planning to apply its new pricing strategy to its other product categories, including shoes and ready-to-wear. Though, given that leather goods make up 90 percent of Mulberry's business, that likely won't have as significant an impact. And although Mulberry appointed a new creative director — Johnny Coca, who comes from Céline — all the way back in December, he doesn't start until next month, and his designs won't hit stores until June of 2016, meaning it will be a while before we see if and how he impacts Mulberry's bottom line.