An end of tax-free shopping for foreign visitors means London is haemorrhaging well-heeled tourists in favour other European capitals, the finance boss of luxury brand Burberry has said.
Burberry CFO Julie Brown said the scheme “was a real incentive to come to the UK for the luxury shopper and now what we’re finding is those tourists are coming to other European cities like Milan and Paris.
“If there was a real alternative tax free shopping scheme available in the UK I think that would definitely bring tourists back to the UK.”
The government was set to re-introduce tax-free shopping for foreign visitors under plans announced by then-chancellor Kwasi Kwarteng in September, but the plans were subsequently withdrawn by his replacement, Jeremy Hunt, in October.
It comes as Burberry said it was betting big on sales of shoes and handbags as it announced a new target to grow sales to £4 billion within the next 3-5 years.
The luxury British brand, headed by newly appointed chief executive Jonathan Akeroid says it plans to double sales of leather goods and make fashion accessories top 50% of total turnover in the long term.
It reported revenue of £1.3 billion in the 6 months to 1 October, up 11%, while operating profit grew 27% to £263 million.
Charlie Huggins, Head of Equities at Wealth Club, said: “Burberry’s new chief executive, Jonathan Akeroid, faces a mammoth task to turn around the struggling luxury fashion house.
“The group’s performance has been disappointing for many years. Growth and margins have significantly lagged that of rivals like LVMH, and much more still needs to be done to revitalise and elevate the brand. A new CEO and creative designer could be just the tonic Burberry needs.
“Make no mistake - Burberry has promise. Its brand still carries weight in the world of luxury fashion. But to challenge the likes of LVMH, some tough choices will need to be made, especially around new products. The culture probably also needs reinvigorating - with an injection of much-needed dynamism not going amiss.”
