Mulberry makes plea for return of VAT-free shopping as wealthy shun London
The boss of luxury handbag maker Mulberry has urged the Government to reinstate VAT-free shopping for tourists as he warned wealthy shoppers are shunning London for Paris and Milan.
Thierry Andretta, Chief Executive Officer of Mulberry, told the PA news agency that the Government’s move to end tax-free shopping in January last year has hammered trading in its high-end stores in the capital, particularly its Bond Street outlet.
It is compounding a slowdown in luxury spending as the cost-of-living crisis begins to take its toll across all sectors, with the group revealing its UK retail sales plunged 10% in the group’s first half.
Shares in Mulberry tumbled as much as 28% after opening on Wednesday before paring back to stand around 11% lower as it revealed it swung to a half-year loss.
Andretta said its Bond Street store, which has sky high rents and business rates, used to see up to 50% of sales from international tax-free shoppers, but this has been decimated to less than 5%.
He commented: “Some wealthy people now prefer to go shopping in Paris or Milan or other capitals – it’s really hitting us. The wealthy are still buying but they’re not choosing to buy in London.”
“(VAT-free shopping) is something we would like the Government to reinstate.”
VAT-free shopping for tourists was axed from January 2021, only for former chancellor Kwasi Kwarteng to reintroduce it in the disastrous mini-budget, before new Chancellor Jeremy Hunt made another U-turn and reversed the planned reinstatement.
Mulberry revealed it swung to a pre-tax loss of £3.8 million for the six months to 1 October against profits of £10.2 million a year ago.
Mulberry saw UK retail sales drop 10% to £34.1 million, with trading in the second quarter particularly impacted as the economic uncertainty and cost crisis knocked shopper confidence, with the lack of VAT-free shopping also taking its toll.
Mulberry said trading improved in the eight weeks to November 26, though it warned over ongoing cost and economic pressures. It said price rises were made to “ensure we make no compromises on the quality of our product” and protect profitability in the face of rocketing inflation.