In a significant restructuring move, Mulberry, the iconic British handbag brand, has announced plans to reduce approximately a quarter of its corporate workforce, affecting around 85 positions globally. This decision comes as new CEO Andrea Baldo seeks to steer the company back to profitability after successfully defending against a takeover bid from Mike Ashley’s Frasers Group. With these layoffs, the company aims to streamline its operations and refocus its strategy to better respond to current market challenges.
The layoffs were confirmed during an internal meeting held on Thursday and will target the firm’s corporate team of 350 employees, leaving its factories, retail stores, and warehouses untouched. Baldo, who took the helm in early September, emphasized that the existing strategy was not yielding the desired results. He reiterated the importance of creating a corporate structure that is agile and capable of driving the company toward profitability.
“We are in a critical period, and our teams must be positioned to act with the speed and efficiency required to restore Mulberry’s financial health,” Baldo stated in a recent company communication. Following his predecessor Thierry Andretta’s exit, Baldo faced immediate challenges, including the overtures from Frasers Group, which made a series of bids culminating in an attempted takeover valued at around £111 million ($144 million).
Mulberry’s board rejected this offer as “untenable.” The board’s decision was primarily influenced by the lack of support from its significant shareholder, an investment vehicle linked to billionaire Ong Beng Seng and his wife, holding a 56% stake in the company. While Frasers Group has described itself as a long-term supporter of the brand, it has called for a credible business plan to navigate the current market difficulties.
In response to these challenges, Mulberry has already taken steps to strengthen its financial position, including raising nearly £11 million through a recent share placement. The company has also initiated measures to trim excess inventory and cut operational costs to improve efficiency.
Despite these efforts, the journey to recovery will be complex. Mulberry, once a vibrant player in the luxury handbag market, has struggled in recent years to maintain its relevance amid shifting market dynamics and increased competition from global brands. The company reported an alarming pre-tax loss of £34 million in its last fiscal year, and its stock value has plummeted nearly 40% within the past year.
Mulberry once enjoyed immense popularity, especially among millennials, with hit products like the Alexa satchel, named after British style icon Alexa Chung, driving strong sales. However, the brand has faced declining fortunes, particularly after major political and economic changes such as Brexit, which have impacted luxury goods sales.
Analysts suggest that restoring Mulberry’s allure will require a careful balance of honoring its heritage while adapting to contemporary consumer preferences. Baldo, known for his success at Danish brand Ganni, is likely to explore avenues to recapture the excitement surrounding Mulberry’s offerings while ensuring that the product line remains competitively priced.
The pressure is mounting as Mulberry navigates a challenging landscape marked by broader luxury market downturns and changing consumer behaviors. As Baldo works to articulate a new vision for the brand, stakeholders will be eagerly watching to see if these significant organizational changes can help Mulberry reclaim its standing in the luxury handbag arena.
With a shrinking workforce and an urgent need for strategic clarity, the next few months will be crucial in determining whether Mulberry can adapt effectively and once again thrive in the competitive luxury market.
