British handbag maker Mulberry sees signs of improvement as it pushes its lower priced bags, but as Hayley Platt reports first half earnings slumped to a 1.1 million pound loss from its ill-fated price strategy.
Their handbags adorn glossy magazines. But higher prices and a slowdown in Asia is causing Mulberry shares to go out of fashion. The British group slid to a pre-tax loss of 1.1 million pounds in the first half of its financial year. That compares to a pre-tax profit of 7.2 million pounds a year earlier. Sales fell 17 percent too. Bryan Roberts is from Kantar Retail. SOUNDBITE: Bryan Roberts, Director of Retail Insights, Kantar Retail, saying (English): "It arguably has had a few strategic missteps over the past year or two. Really chasing the ultra premium end of the market by increasing price points and really focussing on the super affluent it's arguably alienated core shoppers both in the UK and overseas." The group's ill-fated strategy led to three profit warnings this year. And the ousting of its chief executive Bruno Guillon. As a result Mulberry changed focus. Instead of competing mainly with luxury brands like Prada It's lowered prices to try and fight off new brands like Michael Kors, which sell for a fraction of the price. The group's retail sales rose 8 percent as it pushed more of its 500-800 pound bags in a bid to win back customers. While international sales, excluding online, rose 20 percent. SOUNDBITE: Bryan Roberts, Director of Retail Insights, Kantar Retail, saying (English): "Mulberry is one of those prestige retailers which is incredibly reliant on travel, on airport retailing and foreign visitors to the big department stores. What we're going to see is more of a focus on cutting price points, re-establishing some of those main stream products." It's hoping the appointment of a new creative director will help revive the brand. Johnny Coca will join Mulberry from French fashion house Celine next year.