The proposals to eliminate VAT-free shopping for tourists will deal a further blow to the struggling luxury sector, the Mulberry boss said, warning that the industry faces “a very uncertain future.”
Shares of the luxury handbag maker fell 11.5% to 147p after revealing declining sales and giving up its annual dividend.
The company said recent transactions have exceeded expectations thanks to an increase in online orders. But he warned that low attendance at tourist sites, especially in the UK, which accounts for 66% of income, will hurt him for some time.
Thierry Andretta, Managing Director, said: ‘We cannot escape the reality that British luxury and UK cities face a very uncertain future, hampered by necessary but dramatic social distancing measures and attendance levels. alarming, as well as the pressures of high rents and business rates and the upcoming changes in duty-free shopping. ”
Last month, the government laid out its intention to end VAT-free shopping for non-European tourists, angering luxury retailers who rely on foreign visitors, particularly from China and the United States, to generate revenue. sales.
Mr Andretta said Mulberry would pressure the government against the changes “in any way possible”. He said sales at Mulberry stores in London were around 60% lower than a year ago due to their reliance on international visitors.
In June, Mulberry revealed it was placing 470 roles in consultation after a drop in demand for its products forced it to cut costs significantly. The company employs 1,400 people worldwide, including 1,140 in the UK.
Mr Andretta said the consultation resulted in 300 job losses, with more than three-quarters of the cuts in the UK.
Sales for the half-year to September 26 were down 29%, but Mulberry reported an “improving trend” where stores reopened. Sales in Asia, where stores began to reopen in April, rose 27%, while digital sales jumped 67%.
The business update came as the company reported a 10% drop in revenue in the year through March to £ 149.3million, while pre-tax losses widened to 47 , £ 9million versus £ 5million.