The Somerset-headquartered brand launched a strategy last year aimed at returning the business to profit

Mulberry has revealed shrinking losses and accelerating sales as its turnaround efforts continue to gather pace.

The Chilcompton-based fashion brand, known for its leather handbags, launched a major turnaround plan early last year as part of efforts to shore up its finances and return to profit.

On Wednesday, the London-listed firm reported a pre-tax loss of £8.9m for the year to March 28, decreasing from a £32.2m loss a year earlier.

Mulberry said profitability has been buoyed by an increase in sales at full price and reduced promotional activity.

The group also cut its costs by around 10% over the year, despite investment into its marketing, brand and digital operations.

It came as the company delivered a 4% increase in revenues to £125.5m for the year, with growth accelerating in the second half, which saw an 11% rise.

In the UK, like-for-like sales rose by 8% on the back of strong growth from its retail shops, which saw a 19% like-for-like increase.

It welcomed more new customers as “new products landed and resonated”, while Mulberry also benefited from improvements in stock availability.

Andrea Baldo, chief executive of Mulberry, said: “We returned the business to growth, significantly reduced our losses and strengthened gross margin through greater full-price discipline.

“What encourages me most is the response from UK customers.

“More than half of our retail and digital sales came from returning customers, demonstrating that we are winning back former clients who already know and love the Mulberry brand and the importance of regaining relevance in our home market in order to grow internationally.”

Shares in the company were 2.2 per cent higher at 140p on Wednesday, striking their highest level for two years.

Icahn Enterprises on Tuesday announced that the company reached a deal to sell Pep Boys to Mavis, one of the largest independent tire and service providers in the country, in a $700 million deal.

Pep Boys has nearly 800 locations around the country and offers auto services including tires, repairs, oil changes and maintenance.

The deal will expand Mavis’ presence in new and existing markets, particularly in the western U.S., where Pep Boys has a significant presence, and will increase Mavis’s network to over 4,400 service centers around the U.S. and Canada.

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Pep Boys is being acquired by Mavis in a $700 million deal with Icahn Enterprises. (Joe Raedle/Getty Images)

“Today’s announcement marks a significant milestone as Mavis continues to execute its growth strategy. Pep Boys is one of the most well-respected names in the automotive aftermarket, and we look forward to welcoming it into the Mavis family of brands,” said Mavis co-CEO David Sorbaro.

Sorbaro added that the deal “will create a stronger, more geographically diverse platform with the scale and capabilities to provide dependable service to even more customers and create meaningful opportunities for employees.”

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Icahn Enterprises chairman Carl Icahn touted the deal in a statement. (Adam Jeffery/CNBC/NBCU Photo Bank/NBCUniversal via Getty Images)

Pep Boys CEO Joe Auriemma said that, “For more than 100 years, Pep Boys has earned the trust of drivers across the country by delivering quality service with honesty and care,” adding that Mavis shares those values and its network will give Pep Boys the “scale, footprint, and operational and technological strength to continue building on its legacy as it enters a new chapter of growth.”

Carl Icahn, chairman of Icahn Enterprises, welcomed the deal and said that they “believe that the combined businesses will benefit greatly from the inevitable economies of scale and from the great experience of the Mavis team in the industry.”

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The deal would expand Mavis’ footprint in the Western U.S. (Fox News)

Under the deal, Icahn Enterprises will retain the real estate it obtained from Pep Boys, as well as the AAMCO Transmissions and Precision Tune Auto Care businesses.

Pep Boys was acquired by Icahn Enterprises in 2016, taking the auto service chain private in an all-cash $1 billion deal after it had been publicly traded.

Mavis operates other auto service brands including Midas, Tire Kingdom and Tuffy.

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The transaction is expected to close in the coming months.

Reuters contributed to this report.