British leather goods brand Mulberry has just released its half-year results and announced a -1% decline in sales to £64.9 million, for the period April to September 2022.
The brand's poor results - a loss of £2.72 million compared to the same period in 2021 (sales reached £65.72 million) - can be attributed to the weak performance recorded during the summer months. Indeed, the summer ended with a -9% drop in turnover, whereas the first quarter ended with +7% growth compared to 2021.
The economic situation in the United Kingdom has a lot to do with it. The United Kingdom is in fact experiencing a period of recession, with national GDP falling by 0.2% in the third quarter of the year and the English economy struggling to return to pre-Covid 19 levels. High inflation is holding back investment and spending.
The UK is a key market for Mulberry, a much-loved brand even among the royal family, and the bad state of the domestic economy has undeniably weighed on the company's financial performance.
In the UK, Mulberry lost 10% of its revenue across all sales channels, particularly via e-commerce, which recorded a 24% drop in sales.
The poor economic climate is not the only reason for these mixed results. Thierry Andretta, the brand's CEO, denounces the negative effects that the Brexit has on spending, particularly the elimination of tax-free purchases for foreign tourists. International customers now prefer European cities where this practice is still in place.
The example of Mulberry's London shops is obvious: before the Brexit, half of the customers were foreigners, whereas today, international tourists barely represent 5% of the buyers.
Mulberry is nevertheless optimistic about future results: in the last two months, financial performance has been much better, boosted by the approach of the festivities.
The Asian market is also a good springboard for the brand, as despite health restrictions, sales have increased by 1% in the last six months, particularly boosted by the web (+23%). A new duty free shop dedicated to the brand opened in Hainan, China.
Another positive point is that Mulberry was recognised as "Sustainable luxury brand of the year" in November by the Walpole British Luxury Awards, thanks to the progress made in the framework of its Made to Last manifesto.
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