Executives at Burberry have called on Chancellor Rachel Reeves to reinstate a tax-free shopping scheme for international tourists in the upcoming autumn budget, arguing it would boost visitor spending and support economic growth. The luxury brand's chief executive, Joshua Schulman, said the UK had been losing out since the value-added tax (VAT) refund programme was scrapped at the end of 2020, with shoppers turning to Paris and Milan instead.
The policy made a brief return under Liz Truss's government in 2022 but was swiftly reversed by her successor, Rishi Sunak. Burberry's chief financial officer, Kate Ferry, noted that UK sales currently account for less than 10% of the brand's revenue but could grow significantly if the scheme were revived. “We would like to see progressive policies that reinvigorate international visitor spending,” Schulman said on a media call on Thursday.
Burberry's call comes as the company reports early signs of recovery under its ‘Burberry Forward’ restructuring plan. Comparable store sales rose 2% in the second quarter, the first increase in two years, while adjusted operating profit for the six months to September reached £19m, compared with a £41m loss a year earlier. However, a £37m restructuring charge, partly due to redundancy costs, led to an overall loss of £48m, an improvement on the £80m loss in the same period last year.
The brand announced in May that it could cut about 1,700 jobs worldwide by 2027, including the entire night shift at its West Yorkshire raincoat factory, to reduce costs. Despite these cuts, Ferry expressed optimism for the future, stating that as the restructuring progresses, the company expects to deliver strong profit and free cash flow.
