Mulberry ditches planned 2nd U.K. factory due to high tax rates
Somerset, England, United Kingdom (AHN) – Luxury goods retailer Mulberry postponed plans Thursday to open a second factory in Britain because of the high tax rates in the country. Mulberry Chief Executive Godrey Davis pinpointed the impact of rising National Insurance rates on operating costs.
However, Davis admitted the company would inevitably have to open a second factory in 2012 to meet the high demand for its high-end handbags. Because of the popularity of Mulberry’s bags, such as the Tillie and Alexa models, its one factory in Somerset can hardly cope with the high demand and is hiking production capacity by 80 percent.
The Alexa bags, priced at a minimum of $1,200 (GBP 800) per piece, helped propel Mulberry’s pre-tax profits for the first half of 2010 to $7.05 million (GBP 4.7 million). As a result, the company’s share prices rose to almost 900 pence from 100 pence in November 2009.
Davis said the political and economic climate in the U.K. has not been conducive to businesses in the past decade, particularly new investments. He proposed NI holidays for manufacturers. Employer NI contributions will go up in April to 13.8 percent from 12.8 percent for workers earning over $204 (GBP 136) a week.
Samantha Cameron, wife of British Prime Minister David Cameron and ambassador of the British Fashion Council, acknowledged last week that the fashion sector helps boost economic growth in the country.
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