Luxury handbag maker Mulberry (MUL.L) plans to make a quarter of its staff redundant as a result of the COVID-19 pandemic.
Mulberry, a favourite of the royal family, said in a statement on Monday it was starting a consultation to reduce its global workforce by 25%. The company employs 1,400 people around the world, split across manufacturing, stores, and head office.
Redundancies will affect all parts of the business, including Mulberry’s main manufacturing base in Somerset.
“In spite of the good performance of our sector leading digital and omni-channel 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 chief executive Thierry Andretta said in a statement.
“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.
“We remain confident in the strength of the Mulberry brand and our strategy over the long-term.”
Most Mulberry stores have been shut since March, with only a handful open across China, South Korea, Europe, and Canada. The company plans to reopen UK stores from 15 June.
“Even once stores reopen,” Mulberry warned, “social distancing measures, reduced tourist and footfall levels will continue to impact our revenue.”
The company warned in March it would likely make a loss in its current trading period. Mulberry said on Monday it was engaged in a “positive dialogue” with its banks and had cash on hand to keep running the business.
"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,” Andretta said.
Shares rose 1.3% on the news.
Mulberry was founded in 1971 in the UK and is known for its leather handbags and purses. Its bags cost upwards of £500 and last year the company made sales of £166m ($210m).