Jonathan Akeroyd says axing of tax break for tourists is damaging sales in retailer’s home market
The boss of Burberry has complained that the UK is at a “competitive disadvantage for global shoppers” which had 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 which is best known for its signature check and raincoats, said sales to tourists had risen 19% in the UK in the three months to April but they had more than doubled in Paris and were up 43% in Milan.
He said total sales rose 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 there had been a big surge in UK tourists spending in Europe “which is quite telling”.
“We are disappointed the government chose to scrap the VAT retail export scheme,” he said. “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 comes 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.
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.”
Source: The Guardian
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