Major change at Mulberry as review means bigger focus on UK, US and wholesale, less on China

Mulberry had plenty of news to share on Thursday as it announced the results of still-new CEO Andrea Baldo’s strategic review. And unlike some reviews, this isn’t just about picking at the edges. For a start the company will focus more on the UK, on its Britishness, on the key US market, on wholesale and will deprioritise China.

The new strategy is dubbed ‘Back to the Mulberry Spirit’ — “a plan to restore Mulberry to profitability through simplification, brand realignment and enhanced customer connection”.

Along with that it has named a new CFO and updated on trading for the 13 weeks ended 28 December.

And that trading update showed just how much it needs a new strategy. Although it said trading over the key festive period was “satisfactory”, group revenue for the period plummeted 18.3%, or 17.1% at constant currency (CC) “as a result of the continuing challenging macroeconomic environment”.

Retail sales fell 16.5% (15.2% CC), with trade in the UK down 20.3% “also impacted by a lack of exposure to outlet and wholesale channels”.

International retail sales were down 8.7% (or 4.6% CC), with trade in Asia Pacific down 27.9% (23.6% CC). Combined with the weak UK numbers, that could have been devastating. But growth of 11.1% (14.9% CC) in the rest of world was encouraging and was due to “positive momentum” in Europe and the US.

So, there’s a clear need for a new strategy but what exactly does it comprise? The board said Mulberry is a “beloved British brand, operating in a resilient category of leather goods and employing quality craftsmanship… The company is also a sustainability champion. The board believes that these strengths set the company apart in its markets”.

In the short term, its focus “will be on rebuilding gross margin and restoring profitability”. Then for the medium term, it’s targeting annual revenue of £200 million+ and 15% adjusted EBIT margins to enhance shareholder value.

It hopes to get to this point this by “simplifying the company for disciplined execution”. That means it will “refocus on the UK market, accelerate growth in the US and re-align operations in Asia with a reduced emphasis on China”.

That last point is really significant and underlines how the China-centric strategies of so many luxury brands have disappointed of late. China may be a potential goldmine for upscale brands but is also fraught with problems when times are tough.

It said it will “execute a channel-agnostic cluster strategy in all markets and re-enter wholesale and outlets”.

Cost controls will be “active and continuous” and it will “implement a focused product offering, reduce promotional dependency and maintain the unique price range, setting Mulberry apart from the market”.

There will also be a brand refresh, “realigning Mulberry’s identity as a British lifestyle brand and reinvigorating its cultural relevance”. It will reposition the company “to celebrate British lifestyle, whilst appealing to global, fashion forward audiences”. This will include an “improved approach to creativity and design: a new creative team to drive cultural relevance and seasonal innovations”.

And data will be key as it leverages insights “to deepen connections and drive demand”. This should also mean improved customer personalisation and in-store experiences and a strengthening of its direct-to-consumer operations “with a refined product launch structure”.

Baldo joined as CEO last September and the company said he has “already taken decisive steps to strengthen its balance sheet and streamline its operations to become a leaner, more agile organisation”.

Additional strategic actions under way include new commercial partnerships such as with Flannels (which is owned by major Mulberry shareholder Frasers Group) and John Lewis. International developments have included building on its Nordstrom partnership with an additional five new sites agreed, new commercial partnerships with Australia’s David Jones and the closure of 12 loss-making stores in APAC.

Its cost focus appears to be intense with it forecasting “a reduction in operating costs of about 25% on an annualised basis vs FY24”.

In product and brand development, there’s a refocused product offer, and expansion of “core icon families” including Islington, Amberley and Bayswater.

And it’s restructuring the leadership team “to bring creativity and operational excellence back to the heart of the brand”

And on that subject, as mentioned, it has a new CFO with Billie O’Connor joining on 17 February 2025. She was most recently CFO and CIO of Milk & More and before this held finance roles at Selfridges Group, M&S, Walgreens Boots Alliance and Esporta Group.

So what did Andrea Baldo have to say about all the changes? “Our new strategy sets out our commitment to turnaround this business and return to sustainable profitability,” he explained.

“We need to get back to where we came from and return to the spirit of Mulberry. First created by Roger Saul over 50 years ago, it is this Britishness, cultural relevance, creativity and responsible craftsmanship that is loved by our customers. These strengths, along with our unique price position, sets us apart from the market.

“It is also clear to me that for Mulberry to succeed, the business model needs to be simplified — including re-prioritising the UK and taking a channel agnostic approach — while also ensuring we lead with creativity to reignite brand desirability and deepen connections with our customers.”

It’s clearly going to be an interesting few years for the brand so expect lots of announcements to come!