After seeing its turnover drop drastically in recent months, Mulberry has made a major commercial decision. That of lowering the price of its handbags to less than 1,383 dollars in order to stimulate demand and sales.
Lower prices to bring Mulberry back to profitability
Now is the time for solutions. Faced with the general decline in demand for luxury products, the Mulberry brand has announced its intention to reduce prices in its leather goods segment. The goal is to sell the majority of its handbags for less than 1,095 pounds, or $1,383, in order to boost revenue. The 60% of the range should therefore be marketed at a price lower than the iconic Bayswater model, sold at this price.
Andrea Baldo, the new CEO of Mulberry who arrived on September 1, told Bloomberg News that the brand was asking for “a little too much for customers”. “In reality, we are becoming a kind of added value in the luxury market”.
This strategy aims to reposition the house in a more affordable segmentwhich will allow Mulberry to encourage its reluctant customers to buy its leather goods and capture the attention of a new audience. This decision follows a drastic drop in turnover of the brand, which fell -19% to 56 million pounds in the first half ended September 28.
“There is no doubt that our sector is going through a period of significant uncertainty, fueled by a challenging and volatile macroeconomic environment which is impacting consumer confidence. […] In response to current market conditions, we have taken decisive steps to streamline our operations, improve our margins, reduce our working capital and strengthen our cash flow.” declared Andrea Baldo when these results were published.
The Asian sector experienced the largest decline, -31%, over this period. But the case of Mulberry, which rejected the takeover offer from its minority shareholder Frasers Group Plc several weeks ago, is far from isolated. Many luxury groups are currently facing a reduction or slowdown in their turnover, in particular due to a fall in demand in China.
