June. 12 - A big sales fall at Mulberry has prompted a strategy reversal. As Hayley Platt reports the English luxury handbag maker will cut prices and halt a move upmarket.
It's an iconic British brand synonymous with style and luxury. But Mulberry's recent move even more upmarket has back-fired. The group's pre-tax profits for the year have almost halved to 14 million pounds. And sales for the past 10 weeks have fallen 15%. Catherine Neilan from retail magazine Drapers says Mulberry has priced itself out of the market. SOUNDBITE: Catherine Neilan, News Editor, Drapers, saying (English): "I think the main problem to try and move the whole pricing structure up towards luxury brands, chasing after brands like Prada and Fendi and that really hasn't worked for them. They've been well established as an accessible luxury brand and that's probably where they should have stayed." The decision to raise the price of the cheapest handbag to more than 500 pounds - and sell some for as much as 2,000 pounds - came from former CEO Bruno Guillion. He left in March following a string of profit warnings. As did the company's highly-regarded creative director Emma Hill. The group's chairman Godfrey Davis is now running the business until a new chief is found. SOUNDBITE: Catherine Neilan, News Editor, Drapers, saying (English): "They need to move quickly to retain the customers or win back customers that they've lost and in the medium term we should see them return to a level of profitability that is strong." Competition from cheaper fashion brands like America's Michael Kors has hurt Mulberry and its other European rivals Louis Vuitton and Gucci. The UK firm hopes re pricing its products will stop the rot. But the cheapest handbag will still cost more than 400 pounds - Mulberry has no plans to change its luxury image completely.