Shares in iconic Somerset-based fashion business Mulberry crashed to their lowest level for 14 years after it warned that its well-heeled customers were continuing to cut back on spending.
The global group, which has manufacturing sites at Chilcompton, south of Bath, and in Bridgwater, also said the cost of opening new stores and ongoing investment in technology were likely to lead to worsening losses this year amid what it described as “a backdrop of challenging macro-economic conditions and a decline in luxury consumer spending”.
In a year-end trading update, the London Stock Exchange-quoted group said group revenue for its last financial year fell by 4%, although it added that gross margins maintained around those reported for the first half of the year.
Retail sales were up by just 0.3% during the period based on a slump of 3.2%% in the UK which all but cancelled out a 7.2% increase in international markets.
In January Mulberry, best known for its top-of-the-range handbags – which often come with price tags of up to £1,600 – said that the 8% drop it suffered in pre-Christmas 2023 sales heralded a tough 2024.
This week, using almost identical words, the group again warned against the challenging market, adding that its full-year results would be impacted by the additional operational costs of new stores in Sweden and Australia and ongoing important investments – including technology – supporting future growth of the group.
Part of that investment will improve its two West of England factories, which between them produce more than half of its total output.
Mulberry chief executive officer Thierry Andretta said while the group had achieved positive revenue growth in the first half, it had not been immune to the broader downturn in luxury spending experienced in recent months, particularly in the UK and Asia.
“This decline was partially offset by positive trading in the US, where we have benefitted from increased brand awareness,” he added.
"Looking ahead, the trading environment in the UK and China remains challenging and we do not expect this to change in the short term.
“We are therefore managing the business prudently, focusing on executing our strategy and vision to become a global sustainable luxury brand."
Mulberry was founded in 1971 by designer Roger Saul, who made leather belts and chokers on the family kitchen table.
Today it employs around 1,400 people across the globe and has offices in London, Paris, New York, Hong Kong, Tokyo and Seoul as well as its headquarters at Chilcompton.
