Mulberry's mixed Golden Quarter: global sales shine, but UK hurt by VAT-free ban

By

Sandra Halliday

Published
Jan 17, 2024

​Mulberry Group issued a brief trading statement on Wednesday and it showed lower sales for the 13 weeks ended 30 December, but there were some bright spots in a mainly bleak report.

Some luxury players have defied the downturn at the upper end of the fashion sector, while many have also struggled badly in recent months. Mulberry seems to be between the two extremes and a 1.5% drop in retail sales for it seems relatively respectable in the circumstances, especially given that it was actually a 0.6% increase at constant exchange rates. 

Admittedly, UK retail sales being down 4% wasn't good, although that’s understandable given the issues around tourist shopping in the UK since the abolition of VAT-free sales for such visitors.

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But international retail sales rose 3.9% and at constant exchange rates they’re up an impressive 10.8%.

That said, Mulberry figures aren't all about retail sales and total group revenue in the period was down 8.4%, as well as being down by a slightly smaller 6.6% at constant exchange rates. There's no denying the company is facing tough times at present.

The company said overall revenue was impacted by the challenging macroeconomic backdrop and decline in luxury consumer spending, although in the run-up to Christmas, the company maintained its full-price sales approach.

Looking at the financial year as a whole, the company also said that group revenue for the 39 weeks ended 30 December was up 0.1% (or 1.3% at constant exchange rates) versus the prior year, with gross margins in line with those reported for the first half. 

As previously highlighted, results for the full year will be hurt by the additional operational costs of new stores in Sweden and Australia and ongoing “important investments, including technology, supporting future growth of the group”.

CEO 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. Despite this, the group maintained its discipline and focus on a full-price strategy against an unusually high promotional environment.  

“Our international sales remained positive, supported by our strategy to bring in-house ownership of overseas stores. 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.”