Today 4

Mulberry's H1 margin reset halves losses, builds wholesale-led resilience

Bottom Line Impact

A 200 bps gross margin uplift and 16% opex reduction have reset Mulberry's breakeven lower, positioning the brand to narrow losses further and potentially approach profitability as wholesale scale and hero products stabilize revenue while disciplined distribution safeguards brand equity.

Executive Summary

Mulberry delivered a margin-led reset in H1 FY2025, lifting gross margin to 69% and cutting opex 16%, more than halving losses despite a 4% revenue decline to GBP 53.9m. A tighter full-price mix, cost discipline, and selective wholesale expansion signal a more resilient profit model heading into the peak holiday quarter, with momentum strongest in Europe and physical retail.

Actionable Insights

Immediate Actions (Next 30-90 days)
Codify channel guardrails and door productivity thresholds for new wholesale partners, with phased shop-in-shops and co-funded marketing for top doors
Rationale: Wholesale is scaling 36% and will be a key growth lever; guardrails protect brand equity and ensure unit economics remain accretive as distribution widens
Role affected:CEO
Urgency level:immediate
Ring-fence GBP 8m to GBP 10m from the recent GBP 20m raise for in-season replenishment of heroes and performance marketing with strict ROAS and payback gates
Rationale: Maintaining a 69% plus gross margin depends on full-price availability and targeted demand capture; disciplined capital allocation preserves cash and margin
Role affected:CFO
Urgency level:immediate
Short-term Actions (6-12 months)
Scale ambassador-led content and gifting campaigns around Roxanne and Hackney, prioritising Europe and UK stores with proven Q2 momentum
Rationale: Hero-product storytelling and localized retail activation are driving store LFL gains; amplifying these in peak weeks should lift full-price sell-through and AOV
Role affected:CMO
Urgency level:short-term
Set SKU productivity gates and dynamic allocation for hero styles, with target weeks of cover below 8 weeks in Europe and reflow from APAC underperformers
Rationale: Concentrating inventory behind winners and reallocating out of slow markets maximizes sell-through and protects the full-price mix
Role affected:Chief Merchandising Officer
Urgency level:short-term

Strategic Analysis

Next 30 to 90 days will be defined by holiday execution with a full-price stance anchored by new icons Roxanne and Hackney, tighter markdown controls, and wholesale sell-out support in new doors. Cash discipline plus the GBP 20m raised for core stock and marketing should fund in-season replenishment and targeted media to convert momentum, especially in Europe where sell-through is accelerating.

Over 6 to 12 months, a structurally higher gross margin and leaner cost base reset breakeven lower, enabling profitable growth even in a mid-single-digit demand environment. The pivot toward high-quality wholesale alongside DTC rationalisation de-risks underperforming geographies, but requires stronger brand governance and shop-in-shop execution to protect pricing power and clienteling depth.

In accessible luxury, margin resilience and product heat are becoming key differentiators as peers lean on promotions. Mulberry's 69% gross margin approaches top-tier levels for the segment, and a hero-product led assortment narrows the gap versus Coach and other leather goods leaders, while UK heritage positioning and circular growth offer defensible points of difference versus promotion-heavy rivals.

Suppliers benefit from steadier order patterns and fewer late-stage cancellations as inventory turns improve; select partners gain volume through expanded wholesale while concessions with weak economics face rationalisation. Customers see fewer promotions and stronger newness, increasing perceived exclusivity and full-price conversion; wholesale partners receive higher sell-out support and stricter door productivity targets.

Risks & Opportunities

Primary Risks

  • Holiday underperformance if reduced promotions dampen conversion amid soft demand
  • Wholesale expansion diluting brand control and average selling prices if door standards slip
  • Prolonged APAC weakness and further traffic declines reducing scale benefits

Primary Opportunities

  • Sustain 200 bps gross margin uplift through disciplined inventory and pricing
  • Accelerate Europe growth via top-tier partners and shop-in-shop rollouts
  • Monetize circular demand with pre-loved up 46% to drive client acquisition and retention

Market Context

The results align with broader luxury dynamics in 2025 where China and wider APAC remain soft, Western markets are mixed but resilient in physical retail, and Gen-Z and younger cohorts favor high-value icons over promotions. Accessible luxury peers are recalibrating toward margin and wholesale productivity; Mulberry's 69% gross margin, tighter cost base, and circular growth differentiate it versus promotion-reliant competitors while European momentum and heritage positioning provide a relative tailwind against sector softness.

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