LONDON — After a trying first half, the tide seems to be turning for Mulberry, which warned in October that sales and profits would fall short of market expectations.
On Thursday, the company said profits declined 35 percent to 7.3 million pounds, or $11.6 million, in the six months to Sept. 30.
The decline was due to higher operating costs as Mulberry upgrades its distribution network, more cautious ordering from its Asian franchise partners due to a slowdown in demand and tough comparative sales.
Revenue in the period rose 5.6 percent to 76.5 million pounds, or $120.9 million, on the back of increased U.K. and international retail sales. All figures have been calculated at average exchange rates for the six months.
The second half is off to a solid start: The company said retail revenue climbed 19 percent in the first nine weeks to Dec. 1, with same-store sales up 11 percent.
Bruno Guillon, Mulberry’s new chief executive officer, said the downturn in profits is part of a bigger strategic story.
“Our big challenge is turning Mulberry into a global luxury brand, a global success story,” he said. “It’s been a fantastic success story in the U.K. and we need to attract new customers without losing the existing ones. And we are working on building sustainable, long-term growth. Our challenge is how to remain an English brand but still be understandable to the Chinese, German and American customers.”
Part of that work, he said, has involved “rationalizing the wholesale network, because it has to be consistent with our retail stores — some of our partners were just not in line with our strategy, but we have some very good wholesale accounts such as Selfridges, Le Printemps and Le Bon Marché.”
He said the wholesale cull was an ongoing process and, “I hope I don’t have to do too much more in the future. In the end, our strategy is all about consistency, quality and defending the brand.”
Mulberry has also upgraded its outlet business and is no longer making product specifically for outlet stores, which has impacted financial performance in the short term.
Guillon, who was formerly managing director of Hermès France, said Mulberry’s retail expansion was on track, with a total of 17 to 20 new stores planned for the current fiscal year, and “around 20 store openings” planned each year for the next four to five years.
So far this year, stores have opened in markets including Singapore, San Francisco, Zurich and Berlin.
EXCLUSIVE: @tomford is opening its first-ever beauty store. The boutique, which opens November 20 in London’s Covent Gardens, was designed with the over-the-top glam Ford is known for. Read the full story on WWD.com, link in bio. #wwdbeauty #wwdnews (📷: Simon Wagner) #TomFordBeauty
New York-based DJ @harleyvnewton threw a party to celebrate the holiday collection of her dress and pajama line @hvn at the Ladurée Beverly Hills. It Girls @katebosworth, @rashidajones and more joined in on the fun, which included cocktails, croque monsieur sandwiches and a photo booth. #wwdfashion (📷: Owen Kolasinski/BFA.com)
For the holidays, @Burberry partnered with 20-year-old artist @blondeymccoy on a series of three outdoor murals in downtown Manhattan. The murals are McCoy’s interpretation of a Christmas eve party, the idea of charity and the spirit of family. His third mural, pictured here, is the most personal. The image depicts McCoy’s grandparents and father in London’s Trafalgar Square in the Seventies. “My work often features lots of sentimental objects.” #wwdeye
For spring 2018, designers applied bold colors and cartoonish motifs on everything from sneakers and belts to key chains. See all the top men’s accessories trends on WWD.com. #wwdtrends (📷: George Chinsee; Prop Styling by @rnasti; Market Editor: @luiscampuzano)
The @dior-sponsored @guggenheim international gala pre-party has a history of drawing cool-girl musical acts to serenade the crowd –– and last night was no exception. @haimtheband performed songs both new and old, and lured a star-studded audience with the likes of Rebecca Hall, Kate Mara, Mamoudou Athie and more. #wwdeye (📷: @lexieblacklock)
In a partnership between the @metopera and the @englishnationalopera, “Marnie” was born. The opera, with costumes sponsored by @mrporterlive, is an adaptation of the 1961 thriller by Winston Graham. Arianne Phillips, who created the costumes, is no rookie: She’s styled Madonna for her tours and created costumes for a myriad of films in the past. Read WWD’s interview with Phillips, where she talks about her inspiration for the opera’s costumes on WWD.com #wwdfashion
@barneysnyc took a different approach to their holiday windows this year. Instead of Christmas decor, Barneys tapped @thehaasbrothers to tell a story of positivity, gratitude and inclusivity via heartwarming silliness and humor. “It’s about kids and it’s about coming together and being family and loving each other,” said Simon Haas. #wwdfashion (📷: @joshuascottphoto)
Beauty influencer @kandeejohnson makes her foray into hair care with a collaboration with @ogx_beauty — making it the first time that OGX has teamed up for a product creation. The collab includes shampoos and conditioners in three scents. At 39 and a mom, Johnson is a different profile than the emerging social media stars, but is considered one of the pioneers of the digital beauty influencer world. Read WWD’s interview with her on wwd.com, including the strangest beauty product she’s ever tried #wwdbeauty