Mulberry told Andy Burnham that the scrapping of tourist tax would bring more work to British industries, a clear sign however that luxury manufacturers intend to test the Prime Minister’s new promise to grow beyond the M25.
Chief executive Andrea Baldo said restoring VAT-free shopping for overseas tourists should be ‘high on the agenda’ for the new Prime Minister, saying it would support jobs across the country, including a manufacturing facility that makes bags in Somerset.
The intervention took place as Mulberry’s losses fell from £32.2 million to £8.9 million, after a reform focused on the domestic market. Sales rose 4 percent to $125.5 million for the 52 weeks to March 28, from $120.4 million a year earlier. Shares rose 5.8 per cent to 145p on Wednesday morning.
Baldo said scrapping the tax, which hundreds of businesses including Primark, Harrods and Burberry have called on previous governments to scrap, would ‘open up an opportunity…that helps every city in the UK.’ He pointed to Liverpool and Manchester as particular beneficiaries, as well as London.
That framework has been identified. Burnham is committed to delivering ‘good growth in every postcode’ through policies that shift economic and political power away from Westminster, and has already used the tax system to demonstrate intent, removing VAT from household electricity bills on his second day in office. Mulberry’s argument is that VAT-free shopping is regional policy disguised as London’s.
Why this matters beyond the West End
For small firms, the tourist tax debate has always been about supply chains rather than storefronts. The UK’s one-of-a-kind retail sector suppliers, packaging firms, transport operators and tourism businesses serve consumers traveling beyond Bond Street.
Rishi Sunak and Jeremy Hunt introduced VAT-free shopping, which allowed overseas visitors to get 20 per cent back on their purchases. HMRC has withdrawn the VAT Retail Export Scheme from 1 January 2021, arguing that the exemption is costly and capital-intensive. European countries charge VAT but refund it to overseas visitors who take their purchases home, leaving Britain as an outsider.
Luxury firms have long called losses their personal goals, hitting the UK economy while boosting sales in Paris and Milan, with some investment heading towards China rather than London. The shopkeepers pressured successive chancellors in the same position, without success.
Resistance to the Ministry of Finance is supported by number keepers. The Office for Budget Responsibility reviewed its costs of termination and concluded that the measure was ‘unlikely to have a significant impact on the productive capacity of the economy’, which is a contention for retailers but has yet to be ruled out.
Production dispute
Baldo’s pitch isn’t just about receipts. It was ‘hugely beneficial’ to be able to offer British-made products to visitors, he said. Mulberry bags are made in Somerset.
‘Tourism is a big part of our business which we have completely neglected because of the situation in London’, he added.
‘I’m sure if we can open that up, we’ll be producing more because people love the UK manufacturing story, and that’s obviously very important. So it’s connected. It’s not just retail, it’s really connected to Somerset and industry.’
The domestic recovery is driven by lapsed customers returning for summer raffia bags and new brands from major lines such as Bayswater. The relaunched Roxanne, which gained popularity in the 2000s and is now fronted by Badass actress Cynthia Erivo, has attracted older fans and Gen Z consumers alike.
‘More than half of our retail and digital sales came from returning customers, which shows that we are gaining from previous customers who already know and love the Mulberry brand and the importance of re-operating in our home market to grow globally,’ said Baldo.
The change depends on reviving the company’s ‘cool Britannia’ image from 2010, when ‘It girls’ like Alexa Chung showcased its products. Distribution has been expanded with additional deals in John Lewis and Selfridges, and Baldo says the brand has found a ‘sweet spot’ in the £800 to £1,200 price range.
For firms moving down the supply chain, the lesson is tangible: a reliable made-in-Britain story is worth paying for, and the customers most likely to buy it are the ones you’ve already sold to once.
