Mulberry (OTC:MLBGF, OTC:MLBGY) is a British luxury goods company best known for its leatherworking. It has its own network of shops and a well-regarded brand in the luxury space. However, it is a small player and that has exacerbated its struggles amid demand depressed by the pandemic. Avoid.

About Mulberry

The company has a key brand, Mulberry. The brand is well-regarded but the lack of a portfolio approach has made itself felt recently, as when consumers tighten their belts, there is no lower priced brand in the portfolio for them to trade down to. Additionally, as an independent, niche player, the brand lacks the heft and security that come with being part of a larger luxury goods house like Louis Vuitton Möet Hennessy (OTCPK:LVMHF, OTCPK:LVMUY) or Kering (OTCPK:PPRUF, OTCPK:PPRUY). It thus relies more on the attractiveness of its mainline brand.

Despite its British associations, the company sources from multiple countries including lower cost countries. It says rather cryptically that its U.K. factories support up to fifty per cent of its leather bag production, whatever that means. Given its premium price points, I think that this is a challenge: as a consumer, I would sadly expect a midmarket brand like Coach to use factories in low cost countries, but I wouldn’t expect of it Louis Vuitton, for example. Mulberry at its high end is comparable to LV.

The Pandemic Has Hit Mulberry Hard

The pandemic and recession have combined in an unfortunate hit for the company. Not only are some consumers spending less on luxury goods, greatly reduced international travel also means lower interest in the quintessentially English brand.

In its preliminary results released this week, the company revealed that even though its year ended 28 March, which meant limited impact from COVID-19 in key western markets, it still took a