Mulberry Narrows Losses and Returns to Growth Amidst "Back to the Mulberry Spirit" Turnaround

Mulberry has announced significant progress in its turnaround strategy, reporting narrowed losses and a return to revenue growth for the fiscal year ending March 28. The British luxury brand’s "Back to the Mulberry Spirit" initiative, launched in early 2025, is demonstrating "meaningful" headway, according to company officials. This strategic pivot appears to be re-energizing the brand by focusing on its heritage, craftsmanship, and core customer base, particularly within its home market of the United Kingdom.

Financial Performance Highlights and Strategic Pillars

The fiscal year concluded with group revenue climbing 4 percent to £125.5 million, a notable acceleration from the previous period. This growth momentum intensified in the latter half of the year, with revenue surging by 11 percent. The digital and retail channels proved to be key drivers, with a combined 9 percent increase in year-over-year revenue for the period.

Perhaps more significantly, Mulberry has dramatically improved its profitability. The reported loss before tax has been significantly reduced to £8.9 million, a substantial decrease from the £32.2 million loss recorded in the prior fiscal year. Further refining these figures, the loss before tax narrowed to £8 million from £24.1 million. The company also achieved a positive EBITDA (earnings before interest, taxes, depreciation, and amortization) of £800,000, a stark contrast to the £16.8 million loss in fiscal 2025. This financial turnaround is attributed, in part, to an improved gross margin, which rose to 71.9 percent from 66.8 percent. This enhancement was driven by a strategic reduction in promotional activities and a renewed emphasis on full-price sales, signaling a return to value-driven pricing.

Concurrently, operating expenses saw a 10 percent reduction, falling to £96.2 million. This cost management was achieved while the company continued to invest strategically in marketing, brand development, and digital infrastructure, demonstrating a commitment to long-term growth rather than mere austerity.

The "Back to the Mulberry Spirit" Strategy: A Marathon, Not a Sprint

At the core of this resurgence is the "Back to the Mulberry Spirit" strategy, spearheaded by CEO Andrea Baldo. This initiative, launched in early 2025, is designed to be a comprehensive overhaul rather than a quick fix. Baldo has consistently characterized the turnaround as a "long-haul effort," emphasizing that "a turnaround is never linear. It’s a marathon, not a sprint." He expressed confidence that the brand is "delivering what we promised" while acknowledging the prevailing macroeconomic uncertainties.

The strategy’s fundamental pillars include simplifying the business operations, reinstating commercial discipline, placing creativity at the forefront of all endeavors, and re-engaging with existing customers rather than attempting to radically reposition the brand. Baldo elaborated that the focus has been on "rediscovering" Mulberry’s inherent strengths: its rich heritage, exceptional craftsmanship, and innovative creativity. These core tenets are now being "brought back to the center of every decision," influencing everything from product development to budget allocation.

Reigniting the UK Market as a Foundation for Growth

A critical component of the "Back to the Mulberry Spirit" plan is the revitalization of Mulberry’s home market, the United Kingdom. The brand views the UK as its foundational territory for future expansion. Significantly, over half of the UK’s retail and digital sales during the reporting period were generated by returning UK customers. This statistic suggests that Mulberry is successfully winning back lapsed clientele in its domestic market.

This resurgence in the UK is further bolstered by strategic wholesale expansions. Mulberry has forged new partnerships with prominent British retailers including John Lewis, Liberty, Flannels, and Harvey Nichols. Baldo highlighted the considerable potential within the UK market, stating, "The fact that there is so much to recover in the U.K., because the business is much smaller than it was before the pandemic, shows there is an upside. That’s why we are focusing most of our investment there." He underscored the strategic importance of a robust domestic presence for international success, noting that "Asia Pacific responds well when a heritage brand is strong in its own territory. The country of origin is extremely important."

Product Innovation and Reconnecting with Core Values

The introduction of new and revitalized product lines has been instrumental in driving customer interest and supporting the shift towards full-price sales. Mulberry reported that a limited edition of its iconic Bayswater bag sold out within minutes of its release, and the Scotchgrain range also experienced strong performance. The Roxanne bag, representing the first major launch under the new creative leadership, has garnered significant momentum, further amplified by a compelling marketing campaign featuring Emmy and Tony Award-winning actress Cynthia Erivo.

These successful product launches are part of a broader initiative to reinforce Mulberry’s proposition as offering "best value for money" within the luxury handbag market. The brand is committed to maintaining its core icons, such as the Bayswater and Roxanne, within an accessible luxury price bracket, typically between £800 and £1200. Furthermore, Mulberry is expanding its offerings into non-leather categories like raffia and crochet, introducing lower entry-point price options. Baldo’s vision is for Mulberry to be recognized as a "handbag expert across the entire year."

Strengthening the Fashion Proposition with Christopher Kane

In a significant move to bolster its fashion credentials, Mulberry appointed renowned designer Christopher Kane as its ready-to-wear creative director earlier this year. This appointment signals a renewed focus on establishing a stronger presence in the ready-to-wear segment of the luxury market.

As part of this renewed fashion focus, Mulberry is set to stage a runway show at London Fashion Week, marking its return after a six-year hiatus. Kane’s debut collection for the brand is scheduled to be unveiled on Sunday, September 20, at 3:00 p.m. The collection, slated for release in January 2027, is expected to interpret the "modern town and country" aesthetic of British lifestyle, with a targeted appeal to a slightly younger, more fashion-forward demographic. Baldo views this return to the fashion week circuit as a strategic imperative: "Going back to fashion week is about reaching customers that are fashion-forward and probably slightly younger than the current customer. It’s a huge marketing moment for the brand."

Early Indicators of Continued Momentum

The positive financial trajectory appears to be continuing into the new financial year. For the 13 weeks ending June 27, Mulberry reported a robust 23 percent increase in group revenue compared to the same period in the previous year. Retail and digital revenue saw an 18 percent rise, or 21 percent on a like-for-like basis.

Geographically, the UK market demonstrated strong performance with a 17 percent increase in retail and digital sales. Europe experienced a significant surge of 35 percent. North America, described as "more resilient," saw a 23 percent increase, attributed to strengthened relationships with luxury department stores such as Nordstrom and Saks, as well as a renewed online strategy aimed at engaging high-net-worth individuals in the region.

Asia Pacific sales, while down 28 percent in absolute terms compared to the previous year, showed a positive trend of 32 percent higher on a like-for-like basis. This performance reflects Mulberry’s ongoing efforts to optimize the business around profitability in this key market. Baldo commented on the regional dynamics, noting that "Some of the fashion-driven markets in Asia Pacific respond well to what is on trend and what actually is culturally relevant. Our Mulberry by Christopher Kane is also much more exposed to Asia Pacific than the U.K." He further elaborated on the strategic expansion in Asia, citing plans for presence in six stores, with the majority located in Asia, and observing a "great response to the new design" from target customers in growing markets like Korea.

Sustainability and Cultural Transformation

Mulberry’s commitment to sustainability remains a cornerstone of its long-term vision. The company’s circular Mulberry Exchange resale business experienced a 46 percent growth in pre-loved sales, successfully attracting younger customers and reinforcing the brand’s "made to last" ethos. Baldo indicated that approximately half of the clients engaging with the Mulberry Exchange are younger, fashion-conscious shoppers new to the brand, highlighting its effectiveness in customer acquisition.

The brand has also made tangible progress in reducing its environmental impact. A 23 percent reduction in UK Scope 1 and 2 greenhouse gas emissions was reported year-on-year. Furthermore, Mulberry has increased its sourcing of leather from accredited, responsible tanneries and maintained its commitment to paying a living wage across its supply chain. The company articulated that "long-term resilience is built on fairness, transparency and circularity."

Internally, a significant cultural shift is underway, emphasizing tighter financial discipline without compromising strategic investments. Chief Financial Officer Billie O’Connor stressed the importance of fiscal responsibility, stating, "Everybody needs to consider every pound as if it’s their own. Would they invest that money if it was theirs?" This heightened awareness has reshaped the executive team’s approach to budgeting, prioritizing profitability over growth at any cost.

Investing in the Future: Digital and Financial Fortification

To support future growth and enhance customer engagement, Mulberry is investing in a comprehensive e-commerce re-platforming and an upgrade of its customer relationship management (CRM) systems. These initiatives aim to improve customer data management and personalize customer interactions. Additionally, a new retail incentive scheme has been introduced to drive store performance.

Financially, Mulberry’s position has been strengthened through a £20 million convertible loan note provided by its two largest shareholders. This, coupled with new committed banking facilities extending to July 2028, provides the company with enhanced financial resources to pursue its medium-term strategic objectives.

Ambitious Medium-Term Targets

Looking ahead, Mulberry has set ambitious targets, aiming for annual revenue exceeding £200 million and an Earnings Before Interest and Taxes (EBIT) margin of 15 percent over the medium term. Achieving the £200 million revenue mark within five years would necessitate an average annual growth rate of approximately 10 percent, a level that Baldo described as "midterm growth on an annual basis" that the group is actively planning for.

The brand’s strategy involves rigorous cost control and aligning expenditure with its strategic priorities, while simultaneously maintaining crucial investments in product development, brand building, and digital capabilities. Inventory management is being carefully controlled, ensuring a "good quality" and "controlled but relevant" stock holding as the group enters fiscal 2027. The continued emphasis on minimizing promotions is viewed as a key factor in sustaining the improved gross margins.

While acknowledging that "there is more to do," Baldo expressed confidence in Mulberry’s trajectory. He asserted that the combination of margin rebuilding, renewed customer engagement, and a revitalized creative momentum is collectively "building a stronger business for the long term."

In early London trading, Mulberry shares saw a slight decrease of 0.3 percent, trading at 136.60 pence, following an opening at 132 pence and reaching a high of 145 pence. This minor fluctuation reflects the market’s ongoing assessment of the brand’s turnaround progress and future prospects.