Mulberry said that given the uncertainty about the impact and duration of COVID-19 on the company and the wider economy, and the effect of the store closures, “we expect the recovery in our overall sales levels over the medium term to be gradual. Even once stores reopen, social distancing measures, reduced tourist and footfall levels will continue to impact our revenue.”
As a result, the company said it has to manage its operations and cost base accordingly to ensure the company “is the correct size and structure to reflect market conditions.” It said it has launched a consultation process on proposals to reduce employee numbers by approximately 25 percent across the global business. Consultations take place with unions and workers before layoffs are made official.
Thierry Andretta, Mulberry’s chief executive officer, said the brand had reacted swiftly to manage the impact of COVID-19 and continues to execute “a well-developed plan to manage capital, reduce costs and maintain a robust liquidity position.”
He added that “in spite of the good performance of our sector-leading digital and omni-channel platform, and our global network of digital concessions, the shutting of all our physical stores has had, and will continue to have, a marked effect on our business.”
He said that taking the steps toward laying off staff “has been an incredibly difficult decision for us to make but it is necessary for us to respond to these challenging market conditions, protect the maximum number of jobs possible and safeguard the future of the business. We remain confident in the strength of the Mulberry brand and our strategy over the long-term.”
Mulberry confirmed that the majority of its stores have remained closed since the end of March. It has re-opened stores in China and South Korea and, more recently, some stores in Europe and Canada.
It has continued to trade through its digital channels, which have operated in all markets without interruption. The digital sales performance has been good, Mulberry added, but cannot fully offset the decrease wrought by store closures.
The company said it continues “to proactively manage capital and reduce costs” and has taken all the necessary steps to manage its inventory levels in line with anticipated demand.
Mulberry said it is also maintaining a positive dialogue with the company’s lenders to ensure it retains its “robust liquidity position.” It confirmed that it has net cash on hand, and its borrowing facilities remain undrawn. Full-year results for fiscal 2019-20 will be released in August.
This story was reported by WWD and first appeared on WWD.com.