The boss of Burberry has complained that the UK is at a “competitive disadvantage for global shoppers” which has held back sales in its home market after the government ditched a VAT tax break for tourists.
Jonathan Akeroyd, the chief executive of the luxury British brand best known for its signature check and raincoats, said sales to tourists had risen 19% in London in the three months to April but they had tripled in Paris and were up 43% in Milan.
He said total sales had risen 28% in the UK for the year as locals and visitors from Europe from the US, Asia and the Middle East spent more, but he noted a big surge in UK tourists spending in Europe, “which is quite telling”.
He said: “We are disappointed the government chose to scrap the VAT retail export scheme. It leaves the UK at a competitive disadvantage for global shoppers. We are celebrating the fact that we are a British luxury brand and very hopeful that when tourists come to the UK they are coming to Burberry. We are really hoping this [tax change] can be revisited.”
Akeroyd’s comments come after the chair of Burberry, Gerry Murphy, described Brexit as a “drag on growth” and said it had left Britain nursing the “weakest” Covid recovery among its big markets.
Murphy told the prime minister, Rishi Sunak, that a decision to remove VAT refunds in 2020 had hurt the economy and was a “spectacular own goal”.
A string of other companies, including British Airways, Mulberry and Fortnum & Mason, have bemoaned the decision and called on the chancellor, Jeremy Hunt, to reverse the decision.
The latest criticism of government policy came as Burberry reported a 10% rise in sales to £3.1bn in the year to 1 April with underlying sales growth rising to 16% in the final quarter of the year from 7% across the year as a whole thanks to a resurgence in China after pandemic restrictions were eased in January. Annual pre-tax profits rose 24% to £634m.
Underlying sales rose 13% in China in the fourth quarter. Akeroyd said the trade from Chinese nationals – within China and overseas – had recovered to 30% of Burberry’s total sales, although it was still short of the 40% registered pre-pandemic.
Akeroyd said China was “a key part of our growth ambition” as he was hopeful of a return of the country’s tourists to Europe as well as spending in their homeland.
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Burberry also reported a strong rebound in Europe, the Middle East and elsewhere in Asia but sales fell back 7% in US, as economic difficulties held back sales of lower-priced items such as trainers, belts and hats favoured by younger shoppers.
Akeroyd said Burberry’s brand repositioning to a more British-focused aesthetic under new creative director Daniel Lee was going well, helping the company sell more of its core products – with sales of traditional raincoats doubling – before the designer’s new products reach stores this autumn.
He said: “We have had significant changes in creative and executive leadership and I am really proud that we have been able to achieve these results given everything that’s happened both externally and internally.”
