Mulberry Group's chief executive has warned that the lack of VAT-free shopping is hitting businesses, as the bag maker reported a fall in revenue amid challenges in the luxury retail sector.
In the run up to Christmas the AIM-listed brand stuck to a full price sales approach. It saw revenue fall 8.4% in the 13 weeks to December 30, with a decline of 4% in the UK.
The fall comes at a time when some high end fashion firms face a slowdown in luxury demand as wealthy shoppers look at the impact of rising inflation and economic uncertainty.
Last week Burberry warned the slowdown is having an impact on its current trading.
At Mulberry, chief executive Thierry Andretta said: "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. Our international sales remained positive, supported by our strategy to bring in-house ownership of overseas stores.”
He added: “In the UK, we continue to believe the lack of VAT-free shopping is impacting the retail landscape, as well as the hospitality, leisure and tourism sectors. Looking ahead, we are continuing to execute our plans and remain confident that our investments will underpin future sustainable growth."
VAT-free shopping, which had made UK purchases 20% cheaper for international visitors, was axed in 2021 with the government pointing out the scheme could cost British taxpayers around £2 billion a year and mainly benefits the capital.
But Britain's luxury goods industry has called for the return of a tax-free shopping scheme as as some tourists head to rival European cities for shopping sprees.
Mulberry said group revenue for the 39 weeks to December 30 edged up slightly at 0.1%.
It also said full-year results, as previously highlighted, will be impacted by the additional operational costs of new stores in Sweden and Australia and ongoing investments.
