Executives at the British luxury fashion house Burberry have made a direct appeal to Chancellor Rachel Reeves, urging her to reintroduce a tax-free shopping scheme for international visitors in the upcoming autumn budget.
A Call for Progressive Policies
During a recent media briefing, Burberry's leadership team called for progressive policies designed to stimulate spending from overseas tourists. They specifically highlighted the value-added tax (VAT) refund programme, which allowed visitors to reclaim the tax on purchases, as a key measure. This scheme was abolished at the end of 2020. Although it briefly returned under Liz Truss's government in 2022, it was scrapped again weeks later by her successor, Rishi Sunak.
Burberry argues that the UK has been at a competitive disadvantage ever since, with shoppers from key markets like the United States, the Middle East, and Asia now choosing to make their luxury purchases in Paris and Milan rather than London.
Potential for Growth and Economic Boost
Burberry sees the chancellor's budget announcement on 26 November as a critical opportunity to lure these high-spending tourists back. Joshua Schulman, Burberry's Chief Executive, stated, "We would like to see progressive policies that reinvigorate international visitor spending, that support jobs and stimulate growth across the whole visitor economy." He emphasised that this would involve "changing the VAT refund scheme, putting us on par with other European countries."
Currently, UK sales account for less than 10% of Burberry's total revenue. However, Chief Financial Officer Kate Ferry indicated this could significantly increase if the scheme returns. "Obviously at the moment [UK sales are] just 10% but it could clearly grow to be a lot more than that, if we had more tourism here," she told reporters.
Signs of a Turnaround Amid Restructuring
The appeal on tax-free shopping comes as Burberry shows early signs that its major restructuring plan, dubbed 'Burberry Forward', is beginning to yield results. The company reported that comparable store sales rose by 2% in the second quarter, marking the first growth in two years.
Furthermore, losses for the six months to the end of September nearly halved. The adjusted operating profit was £19 million, a significant improvement from the £41 million loss reported for the same period last year. Schulman commented, "We have begun to see customers return to the brand they love... While it is still early days and there is more to do, we now have proof points."
This financial recovery occurs against a backdrop of substantial restructuring, including a £37 million charge linked to job cuts. The company has previously announced plans to cut up to 1,700 jobs globally by 2027 to reduce costs and restore profitability.
