New boss Godfrey Davis said the company had got it wrong by following its luxury goods rivals in continually putting up prices
Mulberry is cutting prices to make its handbags more affordable after admitting that the cost of its bags, which sell for up to £5,000, had got "out of line" with what its British customers are prepared to spend.
Godfrey Davis, the company's interim executive chairman who ousted chief executive Bruno Guillon last month, said the company was introducing a range of bags costing between £495 and £695 in June.
Davis admitted that Mulberry had got it wrong by following other luxury goods companies in continually putting up prices, as rich buyers from China and the Middle East increasingly became fans of high-end British brands.
"Prices have moved up considerably," he said. "We got slightly out of line. We are doing this [introducing the cheaper range] for our British customers."
The new range will start at the same price point as the company's classic Bayswater clutch (£495) but will include "quite substantial" bags at less than £700.
Davis reassured his loyal customers that Mulberry would not skimp on the quality of materials. "That's why our margin will be squeezed, we don't compromise on quality."
He warned shareholders and the City that introducing the cheaper bags would have "short-term financial consequences" but said it was "necessary to ensure the future strength of the Mulberry brand".
"Following the recent change in management, we are focusing on achieving sales growth through the reinforcement of our product offering at more affordable prices to meet the expectations of our loyal customers," he added.
More than 60% of Mulberry's sales are rung up in the UK and many shoppers have defected to fast-growing brands such as Michael Kors and Coach, whose arm candy are priced at a fraction of their more illustrious rivals.
Mulberry said it expected pre-tax profits of about £14m for the year to the end of March 2014. The group delivered profits of £26m last year and analysts had expected profits of about £19m this year.
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