Mulberry Group’s Luxury Handbag Designer Is Seeing Lower Online Sales

Mulberry Group had suffered a half-year loss due to a decline in digital purchases in the United Kingdom amid a deteriorating retail environment.

The luxury handbag manufacturer lost £4 million in the six months ending 1 October, compared to a profit of £7.3 million in the same period last year, when it benefited from the sale of a store lease in Paris. Higher investment in technology and marketing, the absence of business rate relief, and the acquisition of its former franchises in Sweden and Australia all weighed on earnings.

Following this statement, Mulberry Group shares plummeted in morning trade before rebounding somewhat to close the day 8.1% down at 262p. Total revenue fell marginally to £64.9 million, owing to a quarter-quarter drop in online retail sales in the UK to £10.8 million as customers returned to shops and the heightened cost-of-living problem pinched consumer wallets.

This was despite higher full-price and wholesale sales, as well as price increases in March and September, which helped raise the company's gross margins. Furthermore, despite harsh lockdown regulations causing substantial economic damage in China, new shop openings increased sales.

Mulberry reported that retail revenues had increased in the eight weeks after the end of the quarter, but warned that the overall economic situation remained hard, particularly in terms of cost pressures.

The UK's inflation rate climbed to 11.1 percent last month, the highest level in more than four decades, owing mostly to massive increases in oil and gas prices, as well as rising food prices.