Luxury handbag brand Mulberry (LON:MUL) has posted a £500,000 pre-tax loss for the six months till end-of-September, despite a growth in overall sales.
Retail sales for the British brand rose 10 percent to £55 million in the first half of the year, and like-for-like sales saw a similar increase of seven percent across the UK market. Nevertheless, increased investment coupled with foreign exchange losses resulted in a heavy loss for the fashion company.
“The new business announced today in north Asia will progress our strategy of developing our retail and omni-channel model in key luxury markets,” he added.
Andretta emphasised the difficulties the company faced amid the marked devaluation of the pound that has occurred since the Brexit vote in June, noting that the UK market had “become more uncertain since we last reported”.
Following the release of the cult ‘Alexa’ satchel bag in 2010, Mulberry dominated the luxury market, defying the general retail downturn that occurred following the 2009 economic crisis. However, attempts to break into the high-end designer bag market through price increases ultimately alienated shoppers, and led to a shrink in revenue which has proved difficult to overcome since.
Nevertheless, Mulberry have in recent years attempted to rejuvenate their brand as price hikes continue to hit profit margins. The brand introduced a new creative director in 2014, Céline’s Johnny Coca, to oversee the revitalization of the brand’s aesthetic. This has led to a rise in sales, alongside a deal made with Challice to break into the Asian luxury markets.
Under Coca, revenue has seen an increase of 10 percent for 2016, compared with a 11 percent decline a year earlier. However, added investment in product diversification coupled with higher costs as a result of currency market movements negatively impacted profit.
Shares in the company dipped by (-3.43%) following the posting, as of 12:27PM (GMT).