Mulberry Group PLC on Tuesday reported declining interim revenue as the firm acknowledged the persistence of trading challenges.
In the half-year to September 28, the Somerset, England-based handbag maker said revenue fell 19% to £56.1 million from £69.7 million the prior year, with uncertain macroeconomic trends continuing to impact its performance.
Revenue for the UK, which represents the firm’s largest market, was down 14% year-on-year to £31.2 million from £36.2 million as low consumer confidence affected sales.
Mulberry shares were down 15% at 100.00 pence on Tuesday afternoon in London and down 39% year-to-date as the firm’s earnings and financial position have disappointed investors.
Amid the recent share price decline the luxury handbag maker has been the target of takeover bids by shareholder Frasers Group, but rebuffed its approach as ‘untenable’.
The firm’s pretax loss for its half-year widened by 23% on-year to £15.7 million from £12.8 million, driven by the fall in revenue, but with this drag partially offset by lower operational costs.
Mulberry’s operating expenses slowed by 16% to £50.7 million from £60 million the year prior as the firm looked to manage its cost base.
Newly installed Chief Executive Andrea Baldo said the firm’s internal team structure is under review as he looks to create a ‘leaner, more agile organisation’.
Staff costs for the period were down 10% to £19.9 million from £22.1 million the prior year with Baldo telling the PA news agency that Mulberry has axed 85 jobs as part of the firm’s strategic overhaul, and with most of the cuts impacting its London headquarters.
Trading for the full-year is expected to be second half-weighted, given the significance of the upcoming festive period for trading.
‘Though I’ve only been in the role of CEO for under three months, the first-half results illustrate the clear need to reprioritise and rebuild the business,’ said Baldo.
Baldo added: ‘In response to current market conditions, we have taken decisive steps to streamline operations, improve margins, reduce working capital, and strengthen our cash position...I am confident we are making the right moves to bring Mulberry back to profitability.’
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