Luxury handbag maker Mulberry is reporting solid growth, despite a sharp decline in profits recently. It changed its plan to raise prices and instead decided to focus on selling more moderately priced items.
Mulberry’s previous strategy of raising prices was a disaster. It caused profits to fall 74 percent for the year to April and led to a series of profit warnings, as well as the departure of former CEO Bruno Guillon.
Mulberry made the changes at the beginning of the year and has been seeing improvement since November. The company is focusing on creating new products that customers will want and investing for the long term. Mulberry has introduced new, moderately priced handbags, including the Tessie and Mini Lily.
Sales in shops fell 9 percent in the first half of 2014 but rose by 9 percent in the second half. This led to an increase of 1 percent for the year. The company expects its wholesale business to stabilize in the next year.
Thierry Andretta took over as CEO in May, and Johnny Coca is expected to join soon in the role of creative director. Andretta has already worked for Mulberry as a non-executive director and was involved in implementing the new pricing strategy.
Mulberry has increased its digital marketing and has seen its online sales grow by 5 percent. Online sales now account for 12 percent of group sales. The company plans to expand internationally and increase investments in stores and e-commerce. Mulberry plans to expand the pricing model it applied to handbags to other items, including shoes and ready to wear.
Mulberry has increased the number of products it produces in Britain and has opened two factories in Somerset. Half of its handbags are now made in Britain.
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