Mulberry blames tourist tax for slump in handbag sales
DESIGNER handbag maker Mulberry has reignited a row over the Government’s tourist tax after it blamed the levy for lower sales over Christmas.
The British heritage brand said the lack of Vat-free shopping helped to drive revenues down by 8.4pc in the 13 weeks to the end of December.
The fall comes after Mulberry closed its flagship Bond Street store last year, claiming it had become “commercially unviable” without Vat-free shopping.
As well as affecting retail, Thierry Andretta, Mulberry chief executive, said the tourist tax was weighing on other industries such as hospitality, leisure and tourism.
Mulberry’s criticism will increase pressure on Jeremy Hunt to overhaul the tourist tax in his spring Budget. The Chancellor has pledged to look again at evidence for reintroducing the scheme amid concerns that British brands were losing customers to rivals abroad.
The UK ended tax-free shopping for tourists following Brexit, although the scheme is still in place in the EU, which has prompted overseas visitors to spend more in cities such as Paris and Barcelona. Michael Ward, the Harrods chief executive, previously told The Telegraph this was causing pain for British brands as luxury labels tend to sell better in their home countries. Mr Ward said a person shopping in the UK was more likely to buy British-made brands than if they were in Paris or Milan.
Burberry last week issued its second profit warning in three months, with shares down 13pc since the start of the year. They have fallen more than 50pc since last April.
Mulberry shares have also tumbled 39pc over the past year, although they rose by 3.5pc yesterday on signs of better sales overseas. Mr Andretta said: “Our international sales remained positive, supported by our strategy to bring in-house ownership of overseas stores.”
Despite this, he suggested the wider global slowdown in luxury was weighing on the business: “In the run-up to Christmas, the macro-economic environment continued to impact consumer spending in the luxury retail sector, which Mulberry was not immune from.”