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Mulberry is “suffering” from the UK government’s decision to scrap VAT-free shopping for tourists, CEO Thierry Andretta said as it released its preliminary results for the year to 1 April 2023 today. The resulting decline in tourist sales forced the brand to close its store on London’s Bond Street in February.
“There is no doubt that the lack of VAT-free shopping has impacted our UK performance, and we, along with other British brands, are suffering the consequences of this,” Andretta said in a statement.
At the Business Connect conference, Burberry chairman Gerry Murphy said the decision to scrap the scheme has put the UK at a disadvantage compared to Europe.
Mulberry Group’s revenues grew 4 per cent year-on-year to £159 million during the year, driven by an uplift in direct-to-consumer sales in China and South Korea. However, in the UK, where Mulberry operates 40 owned stores and concessions, retail sales slipped to £87.8 million from £88.5 million the previous year. The company said it closed its Bond Street store in February because “the lack of VAT-free shopping in the UK and the decline in tourist shoppers had impacted footfall and sales”. Staff were re-deployed across Mulberry’s remaining London store network.
UK prime minister Rishi Sunak scrapped the VAT-free shopping scheme for tourists in 2021, when he was chancellor. At the time, the Treasury said it was “a costly relief that does not benefit the whole of [Great Britain] equally”. Since then, several brands and retailers have urged the government to reinstate the scheme to help boost the British economy.
"The tourist tax is a drag on our economy, undermining the home advantage of great British brands,” said Dee Corsi, CEO of New West End Company, following Andretta’s statement today (New West End Company is a business partnership of 600 UK and international retailers, restaurateurs, hoteliers, galleries and property owners in London s West End). “Data from VisitBritain shows nearly half of long-haul travellers see shopping as one of their priorities. The West End and its retailers have been recovering strongly since the pandemic, but until this misguided tax is removed we’ll be letting opportunity slip through our fingers.”
Away from the UK, Mulberry’s revenues in Asia Pacific edged up 3 per cent to £28.9 million. The brand now operates 43 brick-and-mortar stores in the region, up from 37 in 2022. Last year, Mulberry opened five new stores in China, five in Australia and four in South Korea. It also launched on new platforms in Korea including online platforms Naver and GS, as well as social media platform Little Red Book in China.
Despite the challenges in the UK, Andretta said Mulberry is “well set for the year ahead”. “We have made significant investments in the company this year, as well as expanding our direct-to-customer model with the recent acquisitions of businesses in Sweden and Australia,” said Andretta in the statement. “These investments were supported by our transformation function, designed to support the delivery of our strategy, with a particular focus on projects and systems that will underpin our growth in the longer term.”
Chairman Christopher Roberts added a note of caution: “Whilst we see every opportunity for Mulberry to continue to succeed, we must remain mindful of the external climate and ongoing sector headwinds, including high inflation.”
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