In hindsight it is always easier to pinpoint a strategic error, although
the question remains why Mulberry’s shareholders thought it was a good idea
to change course and re-brand a classic British leather goods company into
a luxury brand remains a mystery.
Mulberry is part-way through a turnaround to get the business back on track
after a disastrous time under former chief executive Bruno Guillon,
formerly of Hermès, whose ill conceived plan to take the bag brand into the
luxury market backfired, alienating former customers without attracting
enough new fans. Price points for bags that were once attainable suddenly
became unaffordable, despite customers showing a strong preference for
retail prices under 1000 pounds, which the majority of Mulberry products
now have.
The news this morning that Mulberry posted a profit in the first half of
the year proved its turnaround plan is working. In revenue that meant a
small gain of 1.6 percent to 67.8 million pounds of total sales, with a
modest profit of 100,000 pounds.
Mulberry’s Chairman Godfrey Davis has had the daunting task of
bringing the once go-to brand for leather goods back into the black, after
both the former CEO and creative director Emma Hill both left. Differences
in opinion regarding operational strategy was cited back in the day, and
the company now has Thierry Andretta as chief executive and Johnny Coca as
creative director.
Some of the improvements deployed by Davis are already starting to bear
fruit, but the pace of change is relatively slow. Perhaps that is why
Mulberry’s share price was down 1.5 per cent in early morning trading.
Andretta said: “Our strategy is beginning to deliver tangible results in
line with our expectations. We look forward to Johnny Coca’s first Mulberry
collection which will emphasise our Britishness and our heritage in
leather, whilst delivering great quality within our targeted price range.
“We remain committed to our UK manufacturing base, which produces around 50
per cent of our handbags. We are excited about the future and look forward
to the Mulberry brand fulfilling its potential both in the UK and
internationally.”
Andrew Hall, consultant at Conlumino, commented: “We have previously
expressed concern over Mulberry’s inability to foster a viable identity of
luxury British heritage; however, the retailer has become more proactive
over this half year, This has positioned Mulberry for a strong Christmas
period, with the nativity spoof Mulberry Miracle video having been viewed
over 1.7 million times and innovative gifting packages or ‘chests’ of Mulberry
products attracting attention.”