Mulberry Faces Headwinds as Luxury Spending Declines, Reports Q3 Revenue Dip

Mulberry Group has reported a decline in revenue for the 13 weeks ending December 30, 2023, with figures down by 8.4 percent or 6.6 percent on a constant exchange rate (CER) basis compared to the same period in the previous year. This dip in performance is attributed to the challenging macroeconomic climate and a notable decrease in luxury consumer spending.

Despite the headwinds, Mulberry maintained its commitment to a full-price sales approach in the lead-up to Christmas. Thierry Andretta, the CEO of Mulberry, acknowledged the impact of the broader economic environment on consumer behavior within the luxury retail sector. He stated, “In the run-up to Christmas, the macro-economic environment continued to impact consumer spending in the luxury retail sector, which Mulberry was not immune from. Despite this, the group maintained its discipline and focus on a full-price strategy against an unusually high promotional environment.”

For the quarter, Mulberry experienced a 1.5 percent drop in retail sales but saw a 0.6 percent increase on a CER basis, including international retail sales growth of 3.9 percent or 10.8 percent on a CER basis and a UK retail sales decline of 4 percent.

Andretta highlighted the positive aspect of international sales, supported by the group’s strategy of in-house ownership of overseas stores. In the UK, however, the lack of VAT-free shopping is seen as impacting the retail landscape, affecting not only Mulberry but also the hospitality, leisure, and tourism sectors.

While the group’s revenue for the 39 weeks showed a slight increase of 0.1 percent or 1.3 percent on a CER basis compared to the previous year, gross margins remained in line with those reported in the first half of the year.

Looking ahead, Mulberry anticipates that full-year results will be affected by additional operational costs associated with new stores in Sweden and Australia, along with ongoing strategic investments, including technology, to support the group’s future growth initiatives. Despite the challenges, Mulberry remains focused on navigating the evolving luxury retail landscape and maintaining a resilient approach to sustain its market position.