Traditions in the Headwind: Challenges for Burberry and Mulberry

In the world of luxury goods, heritage is considered an essential component of brand identity. However, for Burberry and Mulberry, the only two publicly traded British manufacturers of luxury clothing and leather goods, this heritage increasingly appears as a double-edged sword. Both companies boast a rich history. Burberry harks back to Thomas Burberry, who once designed durable fabrics for explorers and soldiers. Mulberry, on the other hand, associates its image with traditional British leisure activities. Despite their illustrious origins, both brands are currently struggling with losses after attempts to penetrate new market segments alienated customers through price increases. Mulberry, once a star of British chic that investors dreamed about, finds itself in a precarious situation. The new CEO, Andrea Baldo, was recently forced to request a capital injection of 10 million pounds. Major shareholders such as the Ong family and Frasers Group, led by Mike Ashley, are the primary contacts here. However, Frasers shows little confidence in the current strategy and demands profound changes. Meanwhile, Burberry has failed to sustainably establish its iconic check patterns and trench coats in the luxury segment. Particularly in the Chinese market, a key region for growth in the fashion industry, Burberry has not been able to compete with brands like Gucci. The increasing pressure in the luxury segment has led to a significant decline in Burberry's market valuation, a problem also being felt by Kering with Gucci. Analysts from UBS and BNP Paribas Exane view the current market situation as a complex challenge. They emphasize the importance of pricing strategies and innovations to revive brand appeal. If this is not achieved, the once shining brands face further decline.