Mulberry is culling about 25 per cent of its staff worldwide as it right-sizes in the wake of the Covid-19 pandemic, equivalent to about 350 jobs.
In a statement, the UK-based fashion brand said that while it has been able to reopen most of its stores in China and South Korea – and some in Europe and Canada – the majority remain closed.
“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,” said CEO Thierry Andretta.
However, despite the good performance of Mulberry’s sector-leading digital and omnichannel presence, and a global network of concessions, the shutting of physical stores has had – and will continue to have – a marked effect on the business.
A consultation process on proposals to reduce employee numbers across the global business has begun.
“[This] 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,” said Andretta.
While digital channels have continued to trade without interruption throughout the pandemic and their sales were good, they could not fully offset the decrease in demand experienced from store closures.
In the UK, Mulberry will begin to phase the reopening of stores from June 15, but with additional safety standards and procedures put in place to ensure they operate safely.
The brand has also taken steps to manage its inventory levels in line with anticipated lesser demand.
“Given the uncertainty as to the impact and duration of Covid-19 on the company and the wider economy, and the consequential effect on demand, 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,” the company said.
Cutting staff levels would help Mulberry to manage its operations and cost base to ensure the company is the correct size and structure to reflect market conditions, said Andretta.