Burberry’s chief executive has called on the UK government to reinstate VAT-free shopping for international visitors, arguing that Britain could reclaim its title as Europe’s leading luxury retail destination.
Joshua Schulman, who joined the iconic British fashion house last year, said overseas shoppers were still avoiding the UK due to the absence of a VAT refund scheme — a policy scrapped in 2021 following Brexit. “International consumers are not shopping in the UK to the extent that we would like,” he said, urging ministers to reintroduce the tax relief.
Speaking after Burberry posted its best sales performance in 18 months, Schulman described VAT-free shopping as “a real lever for growth” that would benefit the entire luxury and retail sector. “This is a great opportunity for the UK to become the number one shopping destination in Europe,” he said.
Burberry’s share price jumped nearly 6 per cent on Friday following Schulman’s comments and a trading update that suggested his turnaround plan, dubbed “Burberry Forward”, is beginning to show results.
The removal of the VAT scheme — which previously allowed non-EU tourists to reclaim the 20 per cent sales tax on purchases — has long been criticised by retail and hospitality leaders. Competitor destinations such as France and Italy still offer tax-free shopping, giving them an edge in attracting high-spending visitors.
Helen Brocklebank, CEO of Walpole, the official body for the UK’s luxury sector, has previously described the scrapping of VAT-free shopping as a “crazy, wrong-headed decision”. The last Conservative government declined to restore the scheme following a review by the Office for Budget Responsibility, which claimed its removal would save the Treasury £540 million a year and that reinstatement would cost £2 billion by 2025-26.
The Labour government has so far held firm. A Treasury spokesperson said: “There are no plans to introduce a new tax-free shopping scheme in Great Britain.” However, tourists may still claim VAT relief if items are shipped directly to their home country.
Industry sources argue that ministers are underestimating the broader economic benefits of reviving the scheme — including increased footfall, tourism spending, and job creation. Schulman noted that British brands are struggling to compete internationally without it and that the policy shift would benefit the entire high street, not just luxury players.
Despite tough conditions, Burberry showed signs of stabilisation in the three months to 28 June. Comparable retail sales fell by just 1 per cent, a marked improvement from a 6 per cent decline the previous quarter and a 21 per cent slump a year earlier. Total revenue dropped 6 per cent to £433 million, partly due to a 4 per cent currency headwind.
The company credited seasonal demand for lightweight outerwear, wellies, scarves and pool slides, alongside high-impact marketing campaigns featuring the Gallagher family and exclusive events with King Charles’s Highgrove estate, for its stronger showing. A new wave of younger, festival-going luxury consumers — coupled with Burberry’s loyal traditional clientele — is also helping the brand broaden its appeal.
Burberry’s trial of in-store “scarf bars” proved successful, with 200 planned globally. Schulman also pointed to “stabilisation” in China, which accounts for around 30 per cent of sales, and modest growth in Europe and the US.
Still, he acknowledged that the brand is in the early stages of its turnaround. Burberry is on track to deliver £80 million of its £100 million cost-saving plan this year, including the controversial decision to cut 1,700 jobs — a quarter of its UK workforce — over two years.
Schulman, who previously led Coach and Michael Kors, has committed to restoring Burberry’s image as a symbol of “timeless British luxury” with a focus on outerwear and heritage pieces. His leadership has already lifted the company’s share price by 66 per cent since his arrival, though it remains below previous highs.
Commenting on the outlook, he said: “It’s a tough macro environment out there and we’re taking things step by step, but we’re optimistic about the quarters ahead.”
Analysts remain cautiously hopeful. Garry White, chief investment commentator at Charles Stanley, said Schulman’s focus on product refinement and digital strategy “appears to be stabilising performance”. But Deutsche Bank warned that future growth will depend on whether Burberry can replicate the success of its core categories across new product lines.
For now, the return of VAT-free shopping could offer a powerful tailwind not just for Burberry, but for the entire UK retail and tourism ecosystem.
