Handbag firm to continue producing in UK despite Brexit costs

Posted on 31 Jan 2018 by Jonny Williamson

The UK luxury fashion company Mulberry is committed to manufacturing in Britain even as it faces higher leather import costs since the Brexit vote its chief executive said.

The British handbag manufacturer is committed to manufacturing in Britain even as it faces higher Brexit costs – image courtesy of Mulberry.

Mulberry produces about 55% of its leather goods at two manufacturing plants in the west of England, and Britain remains its biggest market even as it expands overseas.

Raw material costs, such as leather from Italian tanneries, were now higher because of Britain’s 2016 decision to leave the European Union after the pound weakened against other currencies, chief executive Thierry Andretta told Reuters in an interview.

Andretta said: “Every supplier we have is related to the euro or the US dollar. This is something that is always a challenge for us because we are still committed to having two-thirds of our collection at (up to) £995, but it is becoming challenging.”

Under Andretta, who joined in 2015 after a string of profit warnings at the firm, Mulberry reversed an ill-fated attempt to go more upmarket. Around 75% of its leather goods now cost just under £1,000 or less, according to the Independent.

The label – whose bags have been sported by celebrities including Prince Harry’s fiancée, actress Meghan Markle – trades off its UK heritage and the skills of its craftsmen.

Andretta said: “We want to continue this and I hope one day when we grow perhaps we will even consider opening another factory.” Manufacturing bases outside Britain include Italy and Spain.

Distribution centre to expand online shopping

Mulberry’s like-for-like retail sales, which compares stores that have been trading for a year or more, were down 1% in the UK in the six months to end-September and fell 3% overseas in that period, but international revenue growth sped up thereafter.

Andretta said, the label, majority-owned by Singapore billionaires Christina Ong and Ong Beng Seng, would roll out a China-based distribution centre later in 2018 to help it expand online shopping and speed up deliveries.