The UK-based luxury brand Mulberry has announced a significant shift in its global strategy, moving away from the Chinese market and instead focusing on its home turf and the United States. This strategic realignment comes as a response to the declining demand for luxury goods in China, a trend that has impacted many high-end brands. Mulberry aims to revitalize its identity as a British luxury brand, echoing a similar move by its competitor Burberry.
Mulberry’s CEO, Andrea Baldo, who assumed the role in September, emphasized the need for the company to reconnect with its roots and simplify its business model. The luxury goods sector has been grappling with a shrinking customer base worldwide due to rising prices, economic uncertainty, and a prolonged period of economic weakness in China. These factors have put pressure on retailers’ margins, prompting brands like Mulberry to rethink their strategies.
Returning to Profitability
In the 13 weeks leading up to December 28th, Mulberry reported a significant drop of 27.9% in Asia Pacific sales. This decline contributed to an overall revenue fall of 18.3% during the same period. However, the company saw an 11.1% growth in sales in Europe and the US, reinforcing the decision to concentrate on these markets. To further address the financial challenges, Mulberry is actively working on reducing its operating costs by approximately 25% annually compared to 2024.
Mulberry’s strategic shift includes streamlining operations and improving margins. The company has also appointed Billie O’Connor as its new finance boss to lead these efforts. This move mirrors similar actions taken by Burberry in November, as luxury brands grapple with the challenging market dynamics.
Embracing British Heritage
Mulberry plans to leverage its British heritage as a key selling point, aiming to attract customers who value craftsmanship and tradition. This renewed focus on its British identity is expected to resonate with consumers in the UK and US markets, where appreciation for heritage brands remains strong. By emphasizing its British roots, Mulberry seeks to differentiate itself from competitors and carve out a distinct position in the luxury market.
The company’s strategic shift away from China and towards the UK and US markets marks a significant turning point in its global strategy. This move, coupled with the focus on operational efficiency and a renewed emphasis on its British heritage, signals Mulberry’s determination to navigate the challenges in the luxury goods sector and return to profitability.
