Burberry’s debt pile has more than doubled over the past year as the British fashion house warned shoppers were shunning its London stores because of Rishi Sunak’s tourist tax.
The British luxury retailer revealed its net debt hit £1.13bn at the end of March, compared to £460m a year earlier.
Burberry said this sharp increase stemmed from lower profitability, as well as its decision to hand £400m to investors last October in a share buyback.
It was viewed as a bid to boost Burberry’s ailing share price, which has fallen 55pc over the past 12 months.
Burberry chief executive Jonathan Akeroyd said the company was comfortable with its current debt position.
However, he fired a fresh warning at the Government over its refusal to reintroduce tax-free shopping, which he said was behind the lower sales in London.
Mr Akeroyd said: “The UK continues to significantly underperform continental Europe. Obviously, the absence of tax-free shopping is playing a part in that. London is really losing out to Paris and Milan, and the gap is widening.”
He said Burberry’s internal figures indicated that spending by Chinese tourists at its London stores was less than half pre-pandemic levels, whereas it had more than tripled in Paris.
Mr Akeroyd said it was a “shame” that Britain was failing to stem the decline, adding: “Without a scheme, the UK will continue to miss out on obvious post-Brexit benefits.”
The Government had been considering reintroducing VAT-free shopping before the Budget. However, it ultimately held off bringing back the scheme, which was scrapped while Mr Sunak was chancellor.
Mr Akeroyd’s comments came as Burberry revealed profits fell more than a third in the year to the end of March, slumping to £418m from £657m a year earlier.
Sales were down 4pc over the year, with Burberry hit by a spending slowdown in China since the start of 2024. It said sales in mainland China tumbled 19pc in the three months to the end of March.
Burberry said store sales in its American region were also down 12pc.
Mr Akeroyd said it was not just younger aspirational shoppers who were cutting back, claiming: “It just seems to be more the luxury sector in general.”
Other luxury giants have similarly been warning over a slowdown in the market, including Gucci owner Kering, which last month said profits would fall by as much as 45pc this year.
Burberry said it expected the market to continue to be tough in the six months to September.
Mr Akeroyd said: “We’re investing in both markets – in China and the US – so I think we’ll see how it evolves.”
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