High-end accessories retailer Mulberry is beginning to feel the effects of the cost of living crisis and recession in the UK, with sales and revenue slipping over the past six months.
Sales at its London stores on Bond St and Regent St have been hit hard by affluent tourists from the US and the Arab states shunning London for shopping for designer handbags in other European cities.
It comes as ministers have stuck to their guns after ditching a plan to introduce VAT-free shopping for overseas tourists, to the dismay of many luxury retailers in the West End.
Mulberry boss Thierry Andretta said luxury shopping in London was becoming “unviable” and London had not seen a similar Covid rebound to other capital cities.
The disparity was partially down to a lack of tax-free shopping for visitors from abroad, he told the Evening Standard newspaper.
The British fashion firm reported a one per cent revenue dip to £64.9m. While sales sank 10 per cent to £34.1m in the six months to the beginning of October.
Sales in China, however, have swelled. Successive lockdowns in areas of the country has seen local consumers spend more at home.
The country is also expected to be the world’s largest luxury goods market by 2025, according to research by consultancy giant Bain & Company at the start of the year.
Rising costs of energy, labour and materials have weighed heavily on most companies in the UK in recent months.
Mulberry booked a pre-tax loss of £3.8m in the period, having pocketed a £10.2m profit in the same months last year, which had been boosted by a one-off profit from selling the lease for a Paris store for £5.7m.
CEO Andretta suggested the company is eyeing a boost in sales in the coming weeks as Christmas present buying begins.
“Looking ahead, we are confident in our ability to execute our strategy and to continue to invest across the Group for our future growth, in spite of the challenging economic and geopolitical backdrop,” he said.
“We are well placed for the festive trading period and will continue to drive the business forward to the benefit of all stakeholders.”