British luxury brand Mulberry said Monday that it’s looking to shed a quarter of its workforce.
Though the retail world is slowly beginning to resurface, Mulberry said the majority of its stores have remained closed, save for in China and South Korea, and a smattering of recently opened locations in Europe and Canada. While its e-commerce sales have been “good” according to the company, they haven’t been able to adequately offset the decreased demand driven by its brick-and-mortar closures. The company is starting a phased reopening that will see more U.K. stores reopened starting on June 15, but the damage already done, coupled with the uncertainty of upcoming demand, means Mulberry is making further decisions to keep its costs at bay and its business afloat.
“Even once stores reopen, social distancing measures, reduced tourist and footfall levels will continue to impact our revenue. As a result of this, we must manage our operations and cost base accordingly to ensure the company is the correct size and structure to reflect market conditions,” Mulberry said in a statement Monday. “The company is therefore launching a consultation process on proposals to reduce employee numbers by approximately 25% across the global business.”
The move is expected to impact its 1,400 employees globally, which could include roles in its London head office, its two factories in Somerset, and its international offices in Paris, New York, Hong Kong, Tokyo and Seoul.
“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,” Mulberry CEO Thierry Andretta said. “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.”
The staff shed will be one part of the company’s efforts to “proactively manage capital and reduce costs.” Mulberry said it has also taken steps to manage its inventory levels in line with anticipated demand—though it didn’t further detail those steps—and it’s working with lenders to maintain a “robust liquidity position,” noting that it has yet to draw on its cash on hand or its borrowing facilities.
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For the 26 weeks ended in September 2019, Mulberry reported revenue of 68.9 million pounds ($87.2 million), with its international business up 12 percent and its U.K. business down 4 percent. Director to consumer sales account for 90 percent of the company’s revenue. Its cash on hand at the end of the period was 6.4 million pounds ($8.1 million), down more than 47 percent from its cash available at the end of the prior year period.
The company is expected to release its fiscal 2020 results in August, but Monday’s statement did warn that it expects the recovery in overall sales levels over the medium term to be gradual.