Selfridges rues loss of tax-free shopping as tourist numbers slip

Selfridges has said the end of tax-free shopping in Britain is partly to blame for a drop in the number of big-spending tourists splashing out in its UK department stores.

The retailer’s UK business, which has stores in London, Birmingham and Manchester, said trade and turnover “continued to feel impacts from various economic factors”, citing “reduced numbers of international visitors visiting the UK and shopping in Selfridges’ stores, with the ongoing impact of the loss of tax-free shopping for international shoppers”.

In newly filed accounts for Selfridges Retail Limited, the company posted a 7 per cent decline in revenue to £774.6 million in the 48 weeks to January 4, compared with the prior 53-week reporting period.

Many UK retailers, including Mulberry and Burberry, have blamed the scrapping of VAT-free shopping for international tourists in 2021 as a key reason for losing customer spending to rival European destinations such as Paris and Milan. They have renewed calls for its reinstatement in Rachel Reeves’s November budget.

Selfridges also blamed the drop in numbers on “disruption to some supply chains due to worldwide conflicts and shipping route delays, inflation and exchange rate fluctuations, price increases across luxury brands, alongside higher costs of living, high energy costs and other economic conditions impacting customer confidence”.

Its UK arm posted a pre-tax loss of £15.9 million for the 48-week period, narrowing from a loss of £42 million in the prior 53-week period.

A Selfridges spokesman said: “We are pleased to report strong performance for the financial year 2024 at Selfridges, with an additional 1.2 million visitors to our stores. We completed the refurbishment of our Oxford Street beauty hall, enhanced our Selfridges Unlocked membership programme and delivered many extraordinary experiences for our customers.”

He added: “This year, we are trading in line with expectations with footfall up again. We have big and exciting plans for the upcoming festive period, which promises to be our most magical Christmas yet.”

The Selfridges group is owned by the Thai conglomerate Central Group and Saudi Arabia’s Public Investment Fund.

JOSE SARMENTO MATOS/BLOOMBERG/GETTY IMAGES

Selfridges’ department store on Oxford Street received approval this year to turn part of the fourth floor, which currently houses staff, into an “exclusive new shopping and social destination for its most valued customers and members”.

However, noisy parties will be off limits. Westminster city council, the local authority, has banned amplified music in the new space.

Oxford Street itself is set for a transformation after Sir Sadiq Khan, the mayor of London, confirmed plans to push through the pedestrianisation of the street from the western edge of Selfridges to the eastern end of the new Ikea, just off Oxford Circus.