The tough UK retail market has again pushed Somerset-based luxury fashion brand Mulberry, best known for its designer bags, into the red.
But the firm, which has its global headquarters and a factory at Chilcompton, said it expects to be profitable again next year as ongoing investment in its international operations pay off. 
Mulberry shares tumbled by more than 5% as shareholders digested the results for the 26 weeks to September 28, during which it made a £9.76m loss against a loss of £5.3m at the same stage last year on sales almost flat at £68.9m.
During the period, the group said it had progressed its strategy to develop as a global luxury brand through a direct-to-customer model, in particular by investing in its stores in Asia, where it increased the number of outlets by four to 32.
International sales through its 47 stores in 25 countries rose by 12% while those in the UK were down by 4%. Asia now accounts for 14% of group revenue – up from 9% in the same period last year.
Direct-to-customer sales – such as those generated through its own stores, concessions in department store and digital channels – now account for around 90% of group revenue, it said.
While sales in the UK – where it operates 55 stores with 19 John Lewis concessions and 14 House of Fraser concessions – edged down, they still account for 65% of total revenue. But Mulberry said UK trading conditions “remained challenging with subdued demand from domestic UK customers and an increasingly promotion-led market”.
Mulberry said it had continued to invest in its two Somerset factories – in Chilcompton and Bridgwater – to maintain its ‘Made in England’ brand positioning.
Both sites, which employ around 600 people, have become carbon neutral this year and the group said it was further developing sustainable product ranges, including the use of recycled materials. Some 65% of Mulberry’s leather is sourced from environmentally certified tanneries. The two factories produce around half of all Mulberry products.
Its Artisan Studio, which produces limited edition ranges, was further developed and doubled the number of limited-edition products doubled including a unique capsule collection for a Tokyo customer event, bespoke bags for the Korean market and products to support new store international openings.
A new store concept that includes innovative, customer-facing technology has been introduced to 11 UK and 13 international stores, the group said, generating positive customer reaction. It will complete the global roll out of the new store concept over the next few years.
During the period Mulberry successfully launched the Millie and Iris soft bag ranges while the Amberley remained its bestselling bag family for the third consecutive season.
Its mini bag range was further extended and enhanced, delivering positive results, it said. There were also new men’s leather accessories and it continued to develop its lifestyle categories, including ready-to-wear, shoes, soft accessories, jewellery and eyewear, with strong performances from new trainer styles and sunglasses.
Mulberry chief executive officer Thierry Andretta said: “We have made further progress with our strategy through continued investment in a direct to customer, international, digital and omni-channel model.
“We are seeing the benefit of recent initiatives in Asia which remains a significant growth opportunity. This will support our ambition for International to become a greater proportion of group revenue.
“Looking forward, we will continue to build Mulberry as a global luxury brand with a strong focus on sustainability and innovative product, appealing to both our existing customers and new audiences.”
