Mulberry's new boss Godfrey Davis insists that consumer appetite for mulberry outlet uk the lower priced handbags is strong, with total retail sales up 8 per cent in the nine weeks since the start of October. Davis said: 'After a difficult couple of years, the steps that we have taken to return Mulberry to growth are beginning to bear fruit'. Mulberry has been looking to revive its fortunes through lower-priced products and the launch of new ranges such as the Tessie bag in June and bags developed in conjunction with model Cara Delevingne. Mulberry, which makes over 60 per cent of its sales in Britain, has seen its shares drop 21 per cent on a year ago, and they held steady today, unchanged at 780p giving the business a valuation of around Â£466million. Mulberry's former boss, Bruno Guillon, was axed in March after two years at the helm. Guillon's strategy to move Mulberry upmarket backfired after consumers flocked to cheaper brands. His departure came just two months after a festive profit warning which wiped a quarter of the stock market value from the leather goods maker. Embarrassingly, his departure actually prompted the company's shares to rise over 5 per cent.
ï»¿It revealed an as-expected Â£1.1m loss â down from a Â£7.2m profit the previous year â while overall sales tumbled 17 per cent to Â£64.7m. Despite the loss, the key figure for the market was that for the nine weeks to the end of November total retail sales were up 8 per cent and online sales jumped 18 per cent compared to the same period last year. Mr Davis says that after a string of profit warnings its new strategy to "return Mulberry to growth" was "beginning to bear fruit". The run-up to Christmas and January is key for mulberry purses the brand but sales were "encouraging". Mr Davis says sales of its new bags at about the Â£500 level â including the Tessie and its Blossom tote â were strong, while its more expensive Cara Delevingne bags â designed in conjunction with the supermodel - were also selling well even at the higher price points. New colours and more smaller leather accessories have also been helping trade and it will continue to open new stores around the world with a big Paris flagship planned for next year. If the number of views of its #winChristmas video are anything to go by then Mr Davis might have Christmas wrapped up.
But Davis, who stepped back into an executive role after Bruno Guillon's exit in March, said steps taken to repair the brand are starting to bear fruit. "The key thing we set out to improve was our product, which lacked a bit of life and innovation. We were about to go to market with our spring/summer collections so we set about injecting a bit of colour to make stores and products more cheerful," he told City A.M. More affordable bags such as the Blossom tote and the Lily have helped to bring customers back to its stores. "What I wanted to do was to create some fun and interesting products at affordable prices alongside our more expensive ranges. We felt we had to re-engage with our customers, and the marketing team have worked hard on this." Traffic to its website has jumped 30 per cent since the launch of its "Win Christmas" advert was launchÂed last month. And while it may be years before the company is generating the revenues it enjoyed at its peak in 2012, Davis said an eight per cent rise in mulberry outlet sale sales over the past nine weeks showed "significant improvement". With Johnny Coca joining as its new creative director next year, Mulberry is cautiously hopefully that 2015 will be the start of a series of successes, rather than a string of profit warnings. But the sales pickup so far has occurred over a relatively short period. That may not prove sustainable going into spring. Meanwhile, the shift to lower-priced goods also risks cannibalization as customers trade down. Margins are also being squeezed to accommodate the strategic overhaul. Mulberry's first-half gross profit margin fell to about 60% from 63% in the last fiscal year and 68% in 2012. Mulberry is ramping up production in its new Somerset, U.K., factory, betting that it can sell more bags at lower prices. That remains to be seen. Wholesale revenues, to partner-operated shops and concession stores, were down by 31% in the first half. Inventories continue to rise, growing by 18% in the first half. That could suggest the company is expecting higher sales in the future. But it could also indicate that sales aren't keeping up with production, suggesting Mulberry may need to discount. The company is valued at three times 2015 sales compared with 2.5 times for competitor Burberry, which reported 16% sales growth in the last fiscal year compared with Mulberry's -1%, according to FactSet.
The company saw losses of Â£1.1million in the first half of this year, compared to a Â£7.2million profit this time last year. Mulberry's aspirations to charge customers over Â£1,000 a bag and enter a more exclusive position in the handbag market led to to the firm issuing three profits warnings this year. Since trying - and failing - to push handbags priced over Â£1,000 earlier
this year, Mulberry's sales have slumped by 17 per cent.