Zero-covid policy in China hits Mulberry

CHINA’S zero-covid policy has dented sales at the British luxury handbag maker Mulberry, after it was once again forced to shut stores in the country to curb the spread of the virus.

Sales were down 1pc since the start of April, Mulberry said, largely due to restrictions in mainland China. Mulberry had to close its Shanghai distribution centre as well as most of its stores in the country as Beijing battles to stop any new Covid outbreaks. Rules were eased in early June after two months of lockdowns.

Mulberry has 12 stores in China, making the country its third largest market in terms of physical shops after South Korea and the UK.

The slowdown came after retail sales roared back in China last year, jumping by 59pc as households spent their lockdown savings.

Revenues were up by 32pc to £152m across the group in the year to April 2, taking sales slightly ahead of prepandemic levels. Mulberry said the rise was driven by efforts to increase fullprice sales and rein in promotional activity. In the UK, retail sales were up 36pc to £90m.

However, Thierry Andretta, the chief executive, suggested growth could be stronger in UK cities, particularly London, as tourists return. He said a decision to end tax-free shopping for tourists in January 2021 had pushed more international travellers to cities in France and Italy. The Treasury argued the tax relief was costly and susceptible to fraud, opting to remove tax refunds for visitors from outside the EU.

Mr Andretta, a critic of the decision at the time, told PA: “My message is therefore they should bring it back because they will witness more tourists.”

The company said it was expecting to continue growing, although “at a slower rate”. Mulberry announced it was resuming dividend payments, with a payout of 3p per share in November.