Mulberry has secured £20m in funding from its top shareholders to help fund its turnaround plan after reporting widening losses.
The luxury brand received support from its two biggest investors, Challice and Frasers Group, with Frasers’ chief acquisition officer James France joining Mulberry’s board as a non-executive director as a result.
The fundraising comes as Mulberry reported its underlying pre-tax loss had widened to £23.7m in the year to 29 March, which it said in part was due to reduced margin through stock optimisation activities.
Sales declined 21% to £120.4m in the year, which it blamed on “challenging macro-economic conditions”.
Mulberry UK retail and digital revenue was down 20% due to weaker consumer sentiment, while North America sales slipped 1%.
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Looking ahead, the brand saw group revenue plummet 18% in the nine weeks to 1 June, with retail and digital sales down 17% reflecting the impact of planned store closures.
However, the closure of underperforming and loss-making shops along with the reduction of mark down is expected to deliver a £2m improvement to underlying EBITDA.
Mulberry chief executive Andrea Baldo said: “We have made significant progress in laying the foundations for Mulberry’s turnaround. Since launching our ‘Back to the Mulberry Spirit’ strategy in January, we have acted at pace to simplify the business, reduce costs, and refocus on our most profitable channels and markets.
“This is an ambitious transformation, underpinned by operational discipline and a commitment to placing creativity at the heart of everything we do.”
“At the same time, we are reinvigorating the brand to reassert its cultural relevance and emotional resonance with customers. The launch of our new campaign, ‘A Return to Somerset’, marks an important milestone, celebrating our roots, values and the distinct British voice that defines Mulberry.”
Baldo continued: “We welcome the additional capital injection from both our major Shareholders, which will enable us to keep moving with pace – investing in product, digital, and international growth to deliver long-term value and the appointment of James France to the board.”
“Whilst the external environment remains challenging, we are energised by the opportunities ahead and remain focused on restoring profitability and achieving our medium-term targets of over £200m in annual revenue and a 15% adjusted EBIT margin.
“I want to thank our teams across the business. Their energy, creativity, and resilience have been instrumental in driving the progress to date and will be just as vital in the journey ahead.”
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