Mulberry to axe a quarter of its workforce
Mulberry issued a devastating coronavirus update on Monday with news that the British luxury company is to axe a quarter of jobs globally. It said the uncertainty around the impact of Covid-19 on the firm and the wider economy, and the consequential effect on demand, mean it expects the recovery in its “overall sales levels over the medium term to be gradual”.
And unlike the upbeat tone that many have taken as they prepare to reopen their stores, it added that “even once stores reopen, social distancing measures, reduced tourist and footfall levels will continue to impact our revenue”.
It therefore needs to “manage our operations and cost base accordingly to ensure the company is the correct size and structure to reflect market conditions”. So it’s launching a consultation process on proposals to reduce employee numbers by “approximately 25% across the global business”.
CEO Thierry Andretta said: "We reacted swiftly to manage the impact of Covid-19 and continue to execute a well-developed plan to manage capital, reduce costs and maintain a robust liquidity position.
"In spite of the good performance of our sector-leading digital and omnichannel 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. Launching a consultation process 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”.
However, he added that “we remain confident in the strength of the Mulberry brand and our strategy over the long term”.
Most of the firm’s stores have been closed since the company’s last update on March 24, although it has been able to reopen stores in China and South Korea and, more recently, some stores in Europe and Canada. Its digital channels have operated in all markets without interruption and while it said the “digital sales performance has been good,” it also stressed that it “cannot fully offset the decrease in demand experienced from store closures”.
Aside from the job cuts, the firm will start a phased reopening of some of its UK stores next week and seems confident that it will make it through the crisis. It explained that it’s “maintaining a positive dialogue with the company's lenders” to ensure it has enough cash available. As of now, it has “net cash on hand and our borrowing facilities remain undrawn”.
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