London losing out to Paris and Milan over tourist shopping, says Burberry

Burberry has reported a sales surge of almost a fifth thanks to a bounceback in China, but the luxury British fashion brand has warned that London is losing out to rivals such as Paris and Milan, which are enjoying a stronger tourist shopping boom.

The British fashion brand, best known for its signature check bags and raincoats, said that global sales grew 18% year on year to £589m in the quarter to 1 July – its fastest growth rate in two years.

The company pointed to a strong sales recovery in mainland China, which suffered from Covid-19 related lockdowns last year, where sales rose 46% year on year. However, the US was a weak spot, with the Americas region reporting a sales decline of 8% year on year in the quarter.

The luxury fashion retailer, which this week launched its “best of Great Britain” campaign as it gears up for the September launch of its autumn/winter collection, said that outerwear and leather goods proved a hit with shoppers.

Sales of outerwear, led by the 167-year-old brand’s classic heritage rainwear, soared 36%, with vintage Burberry check and Francis sunglasses also selling well. The company also said that leather goods sales rose by 13% year on year.

However, the company, which said that tourist growth across Europe rose 53% year on year, said that the UK government’s decision to stop allowing tourists to reclaim VAT on shopping purchases was hurting Britain’s status as a holiday shopping destination.

“London has strength but we are definitely seeing a stronger recovery of [shopping] in continental tourists compared to the UK,” said Ian Brimicombe, the interim chief financial officer at Burberry. “At the moment we are seeing Britons going to Europe and other nationalities going to continental Europe for their buying as opposed to London.”

Brimicombe, who said that tourists had not been put off shopping in Paris despite the recent riots and unrest in France, said the UK needed a new scheme because European rivals offered various incentives to shoppers.

“Being a home British brand we would love to attract [more] tourists [shopping] here,” he said. “It is not really a level playing field at the moment. We need to even up the competition with continental Europe.”

Sales across Europe, the Middle East, India and Africa rose 17% in the first quarter.

Burberry also enjoyed a strong performance across Asia Pacific. Sales in southern Asia rose 39%, with Japan up 44%, while tourists splashing out on the luxury brand when on holiday drove sales up 17% across Europe.

“The luxury market continues to thrive unabated as more well-heeled shoppers continue to purchase items consistently, with the demand levels this provides helping to maintain the market,” said John Coldham, a retail partner at the law firm Gowling WLG.