Luxury fashion brand Mulberry (LSE:MUL) has seen its shares drop to near penny-stock levels due to a tough year for the sector. Currently trading at around 110p each, down from 245p a year ago and £24 a decade ago, the company’s market cap has also fallen to just £63m.
Investing in penny stocks, or almost penny stocks, comes with higher risks due to their lower levels of capitalization and greater volatility. Mulberry’s stock is not quite at penny stock levels, but it’s close. The company has faced challenges in the luxury goods market, with group revenue declining 4% in the past year. UK sales have fallen 3.2%, while international sales were boosted by new stores in Sweden and Australia.
Looking ahead, management expects negative trends to continue in the near term, especially in the Asia-Pacific region where growth has been impacted by challenges in China. Despite these difficulties, Mulberry is making efforts to build brand awareness in North America and capitalize on sustainable consumption trends.
Luxury stocks, including Mulberry, have faced tough times recently, and there may be more challenges ahead. While some analysts maintain a positive outlook on the stock, it’s important to carefully assess the company’s performance before considering an investment. Investing in a once highly valued brand like Mulberry may be tempting, but clear signs of a turnaround are needed before committing capital.