LONDON — British luxury brand Mulberry saw revenues rise 4 percent to 159.1 million pounds, or $202 million, in the fiscal year ending April 1, beating expectations of 2 percent growth, according to calculations by Barclays.
The growth was mainly driven by Asia Pacific, with sales increasing 3 percent to 28.9 million pounds in the period despite COVID-19 disruptions in China, and international sales, up by 12 percent year-over-year to 46.5 million pounds.
Meanwhile, retail sales in the U.K. dropped 1 percent. The company cited the impact of the broader economic environment the nation experienced during the first 12 weeks of the fiscal year.
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Thierry Andretta, chief executive officer at Mulberry, said in the annual results filings that the U.K. business was impacted as “much of our business came from its popularity with tourists enjoying the VAT-free shopping environment. However, when this was removed, we saw a dramatic drop in footfall and sales.”
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Pretax profits in fiscal 2023 slumped to 13.2 million pounds from last year’s 21.3 million pounds. This included impairment reversals for its Bond Street and Regent Street stores of 14.8 million pounds, as a result of the closure of the Bond Street unit last February.
Dee Corsi, CEO of New West End Company and chair of the Association of International Retail, agreed that “the tourist tax is a drag on our economy, undermining the home advantage of great British brands.”
“In contrast to what the Treasury claims, data from VisitBritain shows nearly half of long-haul travelers see shopping as one of their priorities. The West End and its retailers have been recovering strongly since the pandemic, but until this misguided tax is removed we’ll be letting opportunity slip through our fingers,” she added of reinstating tax-free shopping for international tourists.
Despite the absence of VAT-free shopping in the U.K., Andretta said the brand is “well set for the year ahead with the right strategy in place to deliver on our growth plans,” as it acquired three stores in Sweden and five stores in Australia that were previously owned by franchise partners, and has gained full ownership of Mulberry Japan Co. Ltd.
“These investments were supported by our transformation function, designed to support the delivery of our strategy, with a particular focus on projects and systems that will underpin our growth in the longer term,” he added.
The brand now operates 111 points of sale worldwide and has signed new agreements with Nordstrom and Selfridges to further develop its direct-to-customer model.
Digital sales saw a 2 percent uplift to 48.4 million pounds, representing 30 percent of total revenue in fiscal 2023, and higher than the 24 percent pre-pandemic level.
Andretta also applauded the company’s efforts in sustainability in the period. Mulberry reached its target of sourcing 100 percent of the leather from tanneries with environmental accreditations, including the Leather Working Group and Sustainable Leather Foundation, while all other materials and packaging used will remain fully sustainable and recyclable.
The company also continued to expand its circularity program, offering pre-loved bags in the U.K. and Europe and restoring more than 10,000 bags every year.