Mulberry Swot Analysis Essay
STRENGTHS | * Mulberry is a British design company known worldwide for its craftsmanship and design. * Mulberry also has a UK based factory in Somerset known as the ‘Rookery’ which promotes the idea of British craftsmanship. * Mulberry has successful collaborations with influential figures within the UK fashion industry such as Alexa Chung and have consequently named a bag after her (the ‘Alexa’) * Mulberry are also launching a new bag named after the American singer Lana Del Rey, known as the ‘Del Rey’ bag which will help to broaden the brand knowledge internationally, particularly North America. * Sales are still rising substantially with a 69% increase from 2010-2011- thus Mulberry is still growing significantly and showing real promise as a global brand. * Mu,berry is expanding globally opening new stores by parteners in Beijing, Hong Kong, Malaysia, Korea, Quatar, UAE and Sydney. * Mulberry is opening a new 5,000sq ft flagship store on Spring Street, Soho New York which will mark the beginning of the next stage of the North America expansion. * There is a Corporate Social Responsibility program which focuses on six key areas: Climate change,
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reducing waste, fair partners, animal welfare, community involvement and health and wellbeing. | WEAKNESSES | * Mulberry has high prices and therefore has a narrow target audience; it does not have a constant more affordable line yet.
* Mulberry is focusing heavily on capitalizing on expansion into China during 2011-2012, but this is not necessarily the best idea with the disposable income in china going not being as high as it previously was. (see bottom of page for link to website for references). * Mulberry has other products on offer, but is largely known for its bags, and so to increase its market share it could increase its product range which is fairly limited. * It also lacks the depth of heritage of some of its other competitors (such as Louis Vuitton) as it was only founded in 1971, so needs to capitalize on its British heritage and British factory in order to compensate.
| OPPORTUNITIES | * Mulberry is supporting British craftsmanship by having a UK based factory in Somerset, but could use more effective marketing in order to promote this and utilize it as a USP for the brand. * Mulberry is growing at a substantial rate within the UK and is establishing itself within the UK market as an up market luxury brand, but has a lot more scope for global expansion with high demand coming from overseas (International sales for 2010-2011 were £40.5 million, up 145% on the prior year). * Disregarding the two (soon to be three) Mulberry stores in New York, there is much scope for American expansion with Los Angeles and West Coast destinations remaining untouched by Mulberry, this is a valuable market for Mulberry especially with the launch of their new ‘Del Rey’ bag with Lana Del Rey being LA based. * Mulberry is focusing on international expansion with events such as the ‘Mulberry Barbeque’ at the Coachella music festival in LA but there is more opportunity to focus on its British roots and so should sponsor more British events such as Glastonbury instead. * There is also opportunity to focus on a younger audience and possibly more affordable range as the price points are all fairly high and unaffordable to the average younger consumer. | THREATS | * Although Mulberry has a factory in Somerset, it only manufactures 30% of its bags in the UK so this could damage the brand image if publicized. * The decrease in disposable income for China could be a threat to Mulberry (who are focusing heavily on Chinese expansion for the upcoming year) who rely on high disposable income for customers buying into their luxury brand. * The general economic condition with the UK being officially in a ‘Double-Dip’ recession could harm Mulberry’s consumer confidence. |
http://www.starmass.com/china_review/living_index/chinese_disposable_income.htm
http://www.guardian.co.uk/education/2007/feb/13/furthereducation.uk2 - good website for british apprentipes for Mulberry.
Economic condition-drapers?! Double dip recession
http://www.drapersonline.com/news/mulberry-full-year-profits-soar/5026233.article#.T7pDPWiW7iM- good drapers article on mulberry in general
http://www.glastonburyfestivals.co.uk/_assets/pdf/educational-resources/25Sponsorship.pdf - good for about sponsoring Glastonbury
http://www.wwd.com/business-news/financial/europes-markets-in-turbulent-mode-5902622- article on mulberry shares
Personality
Culture Values
Self image
Reflection
Relationship
Physique
Physique: * Product: Women’s clothing and bags/accessories * Logo:Mulberry Tree * Type of Store: Primarily standalone and within the UK
Personality:
* Classy * Fashion Orientated * Sociable * Successful
Culture Values: * Founded in 1971 in Somerset in rural England, Mulberry focuses on British design and craftsmanship. * The brand epitomizes British style and glamour, recently venturing into the music industry with the ‘Del Rey’ bag.
Self Image: * The Mulberry brand stands for style and on trend with the latest fashions. * With its LFW shows being one of the hottest tickets around during that week, consumers buying Mulberry feel as though they are part of the action and unique because of that.
Reflection:
* The brand is aimed at customers who are fashion conscious who feel proud owning a piece of such a successful and sought-after British Brand. * Mulberry is also aimed at customers with a higher income who can afford to spend more to accommodate the 30% of production being based, and customers appreciate this unique quality within the brand.
Realtionship:
* Mulberry aims to forge relationships with the new ‘it girls’ who are on trend at that moment. * Examples of this include Alexa Chung and Lana Del Rey. * This allows Mulberry to be constantly on trend and desirable.
FINANCIAL REPORT
FINANCIAL REPORT
According to Mulberry’s official accounts their financial information is as follows:
Mulberry Financial Reports for year ended 31 March 2011: * Mulberry revenues increased by 69% to £121.6 million (2010: £72.1 million) * Retail sales up 44% to £73.5 million, like-for-like up 43% * Wholesale shipments to third-parties up 130% to £48.1 million * Profit before tax up 358% to £23.3 million (2010: £5.1 million) * Basic earnings per share up by 473% to 29.8p (2010: 2.2p per share) * International sales were £40.5 million, 145% up on the previous year
Operating Highlights for year ended 31 March 2011: * 9 new stores opened during the year in Beijing, Hong Kong, Malaysia, Korea, Quatar, UAE, the Netherlands and Sydney. * New flagship store opened at 50 New Bond Street, London * Global expansion continued with international revenues growing 145% to £40.5 million (2010: £16.6 million) * Online sales grew 64% to £9.2 million, accounting for 8% of sales * New London Headquarters opened on Kensington Church Street. * Retail sales in Mulberry’s own stores and department store concessions increased for the year by 40%. * Sales through the website (www.mulberry.com) grew by 64% to £9.2 million. * The two New York stores have recorded sales increases of 122%. * The new London Headquarters allowed the whole team to be under one roof for the first time and provides excellent showroom facilities; the net cash cost of this project during the year was £3.2 million. * Mulberry is adapting to accommodate the rapidly growing demand and are expanding their factory in Somerset and it will start occupying new space during August 2011. This will add approximately 30% to the UK capacity and it is projected to generate over 50 new manufacturing jobs which will include school leavers who will be trained under the apprenticeship scheme.
In order to properly understand Mulberry’s financial situation it is important to analyse whether it has a healthy cash flow, and this can be achieved using the Acid Test ratio. In 2011 Mulberry’s current assets were £76,587,000 with its stock being valued at _____so Mulberry’s current assets not including stock equaled _____. The company’s liabilities totaled £34,555,000 in 2011 and were made up of current liabilities including £30,476,000 of trade and other payables (trade creditors, Accruals and deferred income and other creditors) and £4,079,000 of tax liabilities. The ratio is therefore ______ showing that Mulberry does/does not have a healthy cash flow.
Comparing Mulberry’s financial information to its close competitors, such as Burberry, also helps give a more thorough insight into Mulberry’s performance. Burberry’s total assets in 2011 were £1364.4 million and its liabilities were £630.7 million. The acid test ratio for Burberry’s finances is therefore _____ which shows that _____. (http://www.burberryplc.com/investor_relations/financial_information/yearly_financials/balance_sheet)
According to Drapers online, Godfrey Davis (Chairman and Chief Executive) said that Mulberry had delivered a ‘step-change’ in profitability during the year and ‘Strong demand in all markets has continued into the new financial year and the outlook for the Mulberry brand is positive. While we remain cautious about the global economic environment, we are focused on accelerating our international expansion’. (http://www.drapersonline.com/news/mulberry-full-year-profits-soar/5026233.article#.T7pDPWiW7iM).
Drapers online also published an article in February 2011 which highlighted the economic obstacles that Mulberry was facing when attempting expand its UK production and open another factory in the UK in addition to the existing Somerset one. Godfrey Davis outlined how Mulberry have previously invested in apprenticeship schemes to encourage younger staff into the business but the government tax rates make it difficult to maintain this production at that cost per minute. ‘When we make anything it takes a certain number of minutes to make it. It’s the cost per minute that’s important. If NI (National Insurance) is put up to 14%, every minute we are paying 14% [of staff wages] to the Government in tax. A constructive approach would be to give some sort of tax break to encourage [businesses] to relocate. An employer NI holiday for a number of years [would work] and UK plc would benefit because we would be creating more employment’. Davis hopes that this ‘NI holiday’ scheme for manufacturers looking to set up in this country would act as more of an incentive to cash-rich British fashion brands than traditional ‘golden handshakes’ used to attract manufacturers from overseas. (http://www.drapersonline.com/news/mulberry-give-us-a-tax-break/5022923.article#.T7pFN2iW7iM).
PROPOSAL
Proposal One: Sponsor Glastonbury Festival * Statement of problem: Mulberry has yet to sponsor a British festival, having previously had involvement in Coachella music festival in Los Angeles but no British music festival. * Market of Opportunity: With an average crowd of…..at Glastonbury music festival, sponsoring the festival would be a perfect marketing opportunity for Mulberry to appeal to a broader audience. * Proposed Project: * Mulberry video on Somerset Factory playing on stage inbetween acts * Mulberry logo on tickets sold * Mulberry logo on stages * Mulberry Tote bags handed out to festival goers * Mulberry tent including acoustic stage, guest speakers (such as Mary Portas) * Mulberry camping site and V.I.P camping * Mulberry V.I.P extra all access * Financial summary: overall cost and profit to Mulberry (….) general cost of sponsoring festival and how it affects those companies that have done it before. This does not take into account the costs of insurance, graphic designers for the logo advertising. * Predicted outcomes: profit estimate and increased brand knowledge about Mulberry’s roots and British heritage, increased awareness for good made in Britain. Proposal Two: Festival Pack * Statement of Problem: Traditional Mulberry goods are not practical for festival goers and only appeal to a limited audience because of its high price. * Market Opportunity: Convienant for festival customers who would be able to buy all their festival necessities in one place, which would be part of the Mulberry brand. It makes the brand more accessible to a possibly younger audience or an audience with a lower income. * Proposed project: * Mulberry tent (?) * Wellies * Rucksack * Waterproof poncho * Financial summary: cost to make/sell, profit to Mulberry. Success of hunter festival pack or other competitors diffusion range. * Predicted outcomes: Look at the percentage of people with increased knowledge of Mulberry and see how much this would increase overall customer base. Proposal Three * Statement of Problem: Mulberry needs to find a way to challenge all the publicity generate from the festival sponsorship and the festival pack onto their normal product range to generate more long-term success and profit-rather than just short-term limited editions. * Market of Opportunity: Mulberry has yet to do a bag based on an event such as Glastonbury and having a ‘Glastonbury’ bag would home in on the British roots of the company and elongate the success of the overall campaign. * Proposed Project: ‘Glastonbury’ bag. Similar to the ‘Del Rey’ bag, the Glastonbury bag would reflect its heritage and be made of durable fabrics (potentially waterproof?) and have a basic structure (have design of bag pictured). * Financial summary: cost to make/sell bag. * Predicted outcomes: Profit estimate, keep the Britishness in Mulberry for Longer!
reducing waste, fair partners, animal welfare, community involvement and health and wellbeing. | WEAKNESSES | * Mulberry has high prices and therefore has a narrow target audience; it does not have a constant more affordable line yet.
* Mulberry is focusing heavily on capitalizing on expansion into China during 2011-2012, but this is not necessarily the best idea with the disposable income in china going not being as high as it previously was. (see bottom of page for link to website for references). * Mulberry has other products on offer, but is largely known for its bags, and so to increase its market share it could increase its product range which is fairly limited. * It also lacks the depth of heritage of some of its other competitors (such as Louis Vuitton) as it was only founded in 1971, so needs to capitalize on its British heritage and British factory in order to compensate.
| OPPORTUNITIES | * Mulberry is supporting British craftsmanship by having a UK based factory in Somerset, but could use more effective marketing in order to promote this and utilize it as a USP for the brand. * Mulberry is growing at a substantial rate within the UK and is establishing itself within the UK market as an up market luxury brand, but has a lot more scope for global expansion with high demand coming from overseas (International sales for 2010-2011 were £40.5 million, up 145% on the prior year). * Disregarding the two (soon to be three) Mulberry stores in New York, there is much scope for American expansion with Los Angeles and West Coast destinations remaining untouched by Mulberry, this is a valuable market for Mulberry especially with the launch of their new ‘Del Rey’ bag with Lana Del Rey being LA based. * Mulberry is focusing on international expansion with events such as the ‘Mulberry Barbeque’ at the Coachella music festival in LA but there is more opportunity to focus on its British roots and so should sponsor more British events such as Glastonbury instead. * There is also opportunity to focus on a younger audience and possibly more affordable range as the price points are all fairly high and unaffordable to the average younger consumer. | THREATS | * Although Mulberry has a factory in Somerset, it only manufactures 30% of its bags in the UK so this could damage the brand image if publicized. * The decrease in disposable income for China could be a threat to Mulberry (who are focusing heavily on Chinese expansion for the upcoming year) who rely on high disposable income for customers buying into their luxury brand. * The general economic condition with the UK being officially in a ‘Double-Dip’ recession could harm Mulberry’s consumer confidence. |
http://www.starmass.com/china_review/living_index/chinese_disposable_income.htm
http://www.guardian.co.uk/education/2007/feb/13/furthereducation.uk2 - good website for british apprentipes for Mulberry.
Economic condition-drapers?! Double dip recession
http://www.drapersonline.com/news/mulberry-full-year-profits-soar/5026233.article#.T7pDPWiW7iM- good drapers article on mulberry in general
http://www.glastonburyfestivals.co.uk/_assets/pdf/educational-resources/25Sponsorship.pdf - good for about sponsoring Glastonbury
http://www.wwd.com/business-news/financial/europes-markets-in-turbulent-mode-5902622- article on mulberry shares
Personality
Culture Values
Self image
Reflection
Relationship
Physique
Physique: * Product: Women’s clothing and bags/accessories * Logo:Mulberry Tree * Type of Store: Primarily standalone and within the UK
Personality:
* Classy * Fashion Orientated * Sociable * Successful
Culture Values: * Founded in 1971 in Somerset in rural England, Mulberry focuses on British design and craftsmanship. * The brand epitomizes British style and glamour, recently venturing into the music industry with the ‘Del Rey’ bag.
Self Image: * The Mulberry brand stands for style and on trend with the latest fashions. * With its LFW shows being one of the hottest tickets around during that week, consumers buying Mulberry feel as though they are part of the action and unique because of that.
Reflection:
* The brand is aimed at customers who are fashion conscious who feel proud owning a piece of such a successful and sought-after British Brand. * Mulberry is also aimed at customers with a higher income who can afford to spend more to accommodate the 30% of production being based, and customers appreciate this unique quality within the brand.
Realtionship:
* Mulberry aims to forge relationships with the new ‘it girls’ who are on trend at that moment. * Examples of this include Alexa Chung and Lana Del Rey. * This allows Mulberry to be constantly on trend and desirable.
FINANCIAL REPORT
FINANCIAL REPORT
According to Mulberry’s official accounts their financial information is as follows:
Mulberry Financial Reports for year ended 31 March 2011: * Mulberry revenues increased by 69% to £121.6 million (2010: £72.1 million) * Retail sales up 44% to £73.5 million, like-for-like up 43% * Wholesale shipments to third-parties up 130% to £48.1 million * Profit before tax up 358% to £23.3 million (2010: £5.1 million) * Basic earnings per share up by 473% to 29.8p (2010: 2.2p per share) * International sales were £40.5 million, 145% up on the previous year
Operating Highlights for year ended 31 March 2011: * 9 new stores opened during the year in Beijing, Hong Kong, Malaysia, Korea, Quatar, UAE, the Netherlands and Sydney. * New flagship store opened at 50 New Bond Street, London * Global expansion continued with international revenues growing 145% to £40.5 million (2010: £16.6 million) * Online sales grew 64% to £9.2 million, accounting for 8% of sales * New London Headquarters opened on Kensington Church Street. * Retail sales in Mulberry’s own stores and department store concessions increased for the year by 40%. * Sales through the website (www.mulberry.com) grew by 64% to £9.2 million. * The two New York stores have recorded sales increases of 122%. * The new London Headquarters allowed the whole team to be under one roof for the first time and provides excellent showroom facilities; the net cash cost of this project during the year was £3.2 million. * Mulberry is adapting to accommodate the rapidly growing demand and are expanding their factory in Somerset and it will start occupying new space during August 2011. This will add approximately 30% to the UK capacity and it is projected to generate over 50 new manufacturing jobs which will include school leavers who will be trained under the apprenticeship scheme.
In order to properly understand Mulberry’s financial situation it is important to analyse whether it has a healthy cash flow, and this can be achieved using the Acid Test ratio. In 2011 Mulberry’s current assets were £76,587,000 with its stock being valued at _____so Mulberry’s current assets not including stock equaled _____. The company’s liabilities totaled £34,555,000 in 2011 and were made up of current liabilities including £30,476,000 of trade and other payables (trade creditors, Accruals and deferred income and other creditors) and £4,079,000 of tax liabilities. The ratio is therefore ______ showing that Mulberry does/does not have a healthy cash flow.
Comparing Mulberry’s financial information to its close competitors, such as Burberry, also helps give a more thorough insight into Mulberry’s performance. Burberry’s total assets in 2011 were £1364.4 million and its liabilities were £630.7 million. The acid test ratio for Burberry’s finances is therefore _____ which shows that _____. (http://www.burberryplc.com/investor_relations/financial_information/yearly_financials/balance_sheet)
According to Drapers online, Godfrey Davis (Chairman and Chief Executive) said that Mulberry had delivered a ‘step-change’ in profitability during the year and ‘Strong demand in all markets has continued into the new financial year and the outlook for the Mulberry brand is positive. While we remain cautious about the global economic environment, we are focused on accelerating our international expansion’. (http://www.drapersonline.com/news/mulberry-full-year-profits-soar/5026233.article#.T7pDPWiW7iM).
Drapers online also published an article in February 2011 which highlighted the economic obstacles that Mulberry was facing when attempting expand its UK production and open another factory in the UK in addition to the existing Somerset one. Godfrey Davis outlined how Mulberry have previously invested in apprenticeship schemes to encourage younger staff into the business but the government tax rates make it difficult to maintain this production at that cost per minute. ‘When we make anything it takes a certain number of minutes to make it. It’s the cost per minute that’s important. If NI (National Insurance) is put up to 14%, every minute we are paying 14% [of staff wages] to the Government in tax. A constructive approach would be to give some sort of tax break to encourage [businesses] to relocate. An employer NI holiday for a number of years [would work] and UK plc would benefit because we would be creating more employment’. Davis hopes that this ‘NI holiday’ scheme for manufacturers looking to set up in this country would act as more of an incentive to cash-rich British fashion brands than traditional ‘golden handshakes’ used to attract manufacturers from overseas. (http://www.drapersonline.com/news/mulberry-give-us-a-tax-break/5022923.article#.T7pFN2iW7iM).
PROPOSAL
Proposal One: Sponsor Glastonbury Festival * Statement of problem: Mulberry has yet to sponsor a British festival, having previously had involvement in Coachella music festival in Los Angeles but no British music festival. * Market of Opportunity: With an average crowd of…..at Glastonbury music festival, sponsoring the festival would be a perfect marketing opportunity for Mulberry to appeal to a broader audience. * Proposed Project: * Mulberry video on Somerset Factory playing on stage inbetween acts * Mulberry logo on tickets sold * Mulberry logo on stages * Mulberry Tote bags handed out to festival goers * Mulberry tent including acoustic stage, guest speakers (such as Mary Portas) * Mulberry camping site and V.I.P camping * Mulberry V.I.P extra all access * Financial summary: overall cost and profit to Mulberry (….) general cost of sponsoring festival and how it affects those companies that have done it before. This does not take into account the costs of insurance, graphic designers for the logo advertising. * Predicted outcomes: profit estimate and increased brand knowledge about Mulberry’s roots and British heritage, increased awareness for good made in Britain. Proposal Two: Festival Pack * Statement of Problem: Traditional Mulberry goods are not practical for festival goers and only appeal to a limited audience because of its high price. * Market Opportunity: Convienant for festival customers who would be able to buy all their festival necessities in one place, which would be part of the Mulberry brand. It makes the brand more accessible to a possibly younger audience or an audience with a lower income. * Proposed project: * Mulberry tent (?) * Wellies * Rucksack * Waterproof poncho * Financial summary: cost to make/sell, profit to Mulberry. Success of hunter festival pack or other competitors diffusion range. * Predicted outcomes: Look at the percentage of people with increased knowledge of Mulberry and see how much this would increase overall customer base. Proposal Three * Statement of Problem: Mulberry needs to find a way to challenge all the publicity generate from the festival sponsorship and the festival pack onto their normal product range to generate more long-term success and profit-rather than just short-term limited editions. * Market of Opportunity: Mulberry has yet to do a bag based on an event such as Glastonbury and having a ‘Glastonbury’ bag would home in on the British roots of the company and elongate the success of the overall campaign. * Proposed Project: ‘Glastonbury’ bag. Similar to the ‘Del Rey’ bag, the Glastonbury bag would reflect its heritage and be made of durable fabrics (potentially waterproof?) and have a basic structure (have design of bag pictured). * Financial summary: cost to make/sell bag. * Predicted outcomes: Profit estimate, keep the Britishness in Mulberry for Longer!