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SOMERSET, United Kingdom — Mulberry Group Plc, the troubled luxury handbag maker, reported a first-half loss as a failed attempt to move upmarket continued to weigh on the company's performance.
The pretax loss for the six months through September was 1.1 million pounds ($1.7 million), Somerset, England-based Mulberry said today in a statement. The performance reflects falling sales, an increase in costs associated with new stores and a lower gross margin, the company said.
Mulberry has been reeling since former Chief Executive Officer Bruno Guillon introduced handbags costing more than 1,000 pounds. Emma Hill, who disagreed with the decision, quit as creative director last year and Guillon’s plan alienated customers, causing the shares to slump. The executive stepped down in March and the company abandoned his strategy.
"We have continued to take steps to return the business to growth and sales for the nine weeks to Nov. 29 are encouraging," Chairman Godfrey Davis said in the statement, noting the successful launch of the Tessie and Cara Delevingne handbags. Retail sales advanced 8 percent in the nine-week period after falling 9 percent in the first half, Mulberry said.
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The bagmaker last month named Celine accessories designer Johnny Coca as Hill's replacement, and subsequently hired former Barneys New York Inc. fashion director Julie Gilhart as non- executive director. It's still searching for a CEO.
“After a difficult couple of years, the steps that we have taken to return Mulberry to growth are beginning to bear fruit and looking further forward, we expect to gain further momentum from the appointment of Johnny Coca as our new creative director,” Davis said.
Mulberry said in October full-year pretax profit would be significantly below estimates after first-half revenue fell 17 percent to 64.7 million pounds.
By Andrew Roberts; editors: Celeste Perri, Thomas Mulier.
