Mulberry has warned that it will only make a “gradual” recovery in sales after it was forced to close shops in the UK and abroad during the Covid-19 pandemic.
Shares in the luxury handbag maker fell 9pc to 151p after it said it would scrap its full-year dividend.
The company said recent trading had been ahead of expectations thanks to a surge in online orders. But it warned that low footfall in tourist locations, particularly in the UK, which makes up 66pc of revenue, would hurt it for some time to come.
“We cannot escape the reality that British luxury and UK cities face a very uncertain future, hampered by necessary but dramatic social distancing measures and alarmingly low levels of footfall, as well as the pressures of high rents and business rates and the upcoming changes to tax free shopping,” said chief executive Thierry Andretta.
Sales for the half-year to Sept 26 were down 29pc, but Mulberry reported an “improving trend” where stores have re-opened. Sales in Asia, where shops began reopening in April, were up 27pc, while digital sales jumped 67pc.
The trading update came as the company reported a 10pc fall in revenue in the year to March to £149.3m, while pre-tax losses widened to £47.9m from £5m.
Mulberry, which manufactures its handbags in Somerset, was already struggling before the pandemic began to hit its international sales at the start of the year.
It blamed a “difficult UK sales environment, affected by Brexit-related political uncertainty, the fall in consumer confidence, [and] an increasingly promotion-led market” prior to the outbreak of coronavirus.