Handbag maker Mulberry has cut dozens of head office jobs as part of a major “rebuild” after revealing that sales plunged by almost a fifth over the past half-year.
The new boss of the fashion firm said he is simplifying the business in order to make it “leaner” as part of a strategic overhaul and help drive a return to profit.
Andrea Baldo, who was appointed chief executive, told the PA news agency that the business has cut 85 roles as part of the shake-up.
The cuts, which impact about a quarter of its 350-strong workforce, have predominantly impacted its London design headquarters, as well as some Somerset office workers.
Though I’ve only been in the role of CEO for under three months, the first-half results illustrate the clear need to reprioritise and rebuild the business
It is part of a strategic review, due to conclude next month, which will also see a shift in the company’s pricing and distribution strategies.
Mr Baldo told PA he hopes to “reinvigorate” the brand by focusing on its “affordable luxury” price position and said it will seek to return to growth in the UK, a market he said the business had “underappreciated” in its previous strategy.
The Somerset company, which was recently the target of takeover efforts by shareholder Frasers Group, is among firms to have been hit hard by a sharp slowdown in luxury spending.
Mulberry told shareholders that group revenues fell by 19% to £56.1 million for the six months to September 28.
It said trading was challenging over the half-year in the face of a “difficult trading environment and uncertain macroeconomic trends”.
Revenues from its wholesale and franchise business dived by 46% to £5.4 million as it was particularly affected by partners in Italy and Denmark reducing their orders due to tough conditions.
Elsewhere, sales in its Asia Pacific division slid by 31% to £9.3 million as it was impacted by weakness in China and South Korea.
Meanwhile, UK revenues fell by 14% to £31.3 million amid “low consumer confidence”.
It also saw pre-tax losses widen to £15.7 million for the period, compared with a £12.8 million loss a year earlier.
Mr Baldo added: “Though I’ve only been in the role of CEO for under three months, the first-half results illustrate the clear need to reprioritise and rebuild the business.
“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.
“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.”
It comes a month after Mike Ashley’s Frasers Group – which owns a roughly 37% stake in the company – ditched plans for a £111 million takeover offer of Mulberry.