- Thierry Andretta wants the UK Government to bring back duty-free shopping
- Mulberry Group revealed first-half underlying pre-tax losses jumped to £12.3m
- Many retailers blame the abolition of the VAT rebate for costing them vital sales
Mulberry Group’s boss has urged the government to scrap the so-called ‘tourist tax’ as the luxury leather goods maker reported higher half-year losses.
Chief executive Thierry Andretta said reinstating duty-free shopping would be ‘one of the most effective ways to encourage business growth’ in the UK.
Hundreds of Britain’s most prominent retailers blame the abolition of the VAT rebate two years ago for costing them vital sales by driving away tourists and losing them to other popular European shopping destinations.
Plea: Mulberry’s boss, Thierry Andretta, has urged the government to scrap the ‘tourist tax’
More than 400 businesses have signed an open letter calling on Chancellor Jeremy Hunt to remove the tourist tax, including luxury brands like Mulberry.
Earlier this week, Hunt told Parliament the Treasury would be ‘looking again’ at its decision to get rid of VAT refunds.
‘As we look ahead to the New Year, I urge policymakers to collaborate with all industries campaigning on this issue and reconsider implementing this to support businesses across the UK,’ Andretta remarked on Thursday.
He made the plea as Mulberry revealed underlying pre-tax losses in the six months ending September more than quadrupled to £12.3million.
The handbag seller said losses reflected investment to support business growth, such as software-as-a-service costs and bringing Swedish and Australian stores in-house.
Its revenue increased by 7 per cent to £69.7million amid a global slowdown in luxury spending and a weaker economic backdrop across the UK and China.
However, that was better than the previous year, when Mulberry’s turnover dipped slightly due to online sales slumping following the end of Covid-related restrictions.
By comparison, digital revenues jumped by a quarter to £20.3million in the most recent half-year period thanks to bumper growth across the Asia-Pacific region and higher average transactions.
The company told investors: ‘The wider macro-economic environment and geo-political climate continues to present some uncertainty, but we are well positioned to navigate this.’
It added that it was ‘well prepared’ for the second half of the financial year when sales tend to be stronger because of the Christmas season.
Mulberry Group shares slumped 7.9 per cent to 152p on Thursday morning, meaning their value has plunged by almost 40 per cent since the year began.
A fortnight ago, fellow high-end retailer Burberry saw its biggest one-day share price decline for over a decade after warning that the subdued luxury goods market was affecting trading.
Its annual operating profits are set to come in at the low end of forecasts while annual turnover could miss its low double-digit growth target.
Like Thierry Andretta, Burberry’s chief executive Jonathan Akeroyd said the absence of VAT-free shopping was hitting business in the UK.
Mark Crouch, analyst at investment platform eToro, said: ‘London is a major global capital – if VAT is undercutting the ability for luxury goods firms – of which there are many in London – to struggle, then the capital could soon lose some of its sheen compared to competitors.’
