Is Mulberry's turnaround plan finally seeing success?

In hindsight it is always easier to pinpoint a strategic error, although the question remains why Mulberry's shareholders thought it was a good idea to change course and re-brand a classic British leather goods company into a luxury brand remains a mystery.

Mulberry is part-way through a turnaround to get the business back on track after a disastrous time under former chief executive Bruno Guillon, formerly of Hermès, whose ill conceived plan to take the bag brand into the luxury market backfired, alienating former customers without attracting enough new fans. Price points for bags that were once attainable suddenly became unaffordable, despite customers showing a strong preference for retail prices under 1000 pounds, which the majority of Mulberry products now have.

The news this morning that Mulberry posted a profit in the first half of the year proved its turnaround plan is working. In revenue that meant a small gain of 1.6 percent to 67.8 million pounds of total sales, with a modest profit of 100,000 pounds.

Mulberry's Chairman Godfrey Davis has had the daunting task of bringing the once go-to brand for leather goods back into the black, after both the former CEO and creative director Emma Hill both left. Differences in opinion regarding operational strategy was cited back in the day, and the company now has Thierry Andretta as chief executive and Johnny Coca as creative director.

Some of the improvements deployed by Davis are already starting to bear fruit, but the pace of change is relatively slow. Perhaps that is why Mulberry's share price was down 1.5 per cent in early morning trading.

"Our strategy is beginning to deliver tangible results in line with our expectations"

Andretta said: "Our strategy is beginning to deliver tangible results in line with our expectations. We look forward to Johnny Coca's first Mulberry collection which will emphasise our Britishness and our heritage in leather, whilst delivering great quality within our targeted price range.

"We remain committed to our UK manufacturing base, which produces around 50 per cent of our handbags. We are excited about the future and look forward to the Mulberry brand fulfilling its potential both in the UK and internationally."

Andrew Hall, consultant at Conlumino, commented: "We have previously expressed concern over Mulberry’s inability to foster a viable identity of luxury British heritage; however, the retailer has become more proactive over this half year, This has positioned Mulberry for a strong Christmas period, with the nativity spoof Mulberry Miracle video having been viewed over 1.7 million times and innovative gifting packages or ‘chests’ of Mulberry products attracting attention."