Selfridges revenue falls as loss of tax free shopping hits tourist spending

Selfridges has attributed a notable decline in revenue to the repercussions of abolishing tax-free shopping for international visitors in Britain. The retailer, which operates flagship stores in London, Birmingham and Manchester, revealed that its UK business continues to grapple with a reduced influx of overseas tourists. This trend persists in the wake of the government’s decision to remove VAT-free shopping for non-UK residents, a policy shift that has seen high-spending travellers favour European alternatives such as Paris and Milan.

In its newly published financial statements, Selfridges Retail Limited reported a 7 per cent drop in revenue, falling to £774.6 million for the 48 weeks ending 4 January, compared with the previous 53-week accounting period. The company’s pre-tax loss narrowed to £15.9 million over the period, a marked improvement from the previous year’s £42 million loss. However, the overall reduction in international visitors remains a pressing concern for the luxury retailer and the wider UK retail sector.

Retailers including Mulberry and Burberry have echoed Selfridges’ concerns, reiterating claims that the scrapping of VAT-free shopping in 2021 has diverted valuable tourist expenditure to rival destinations. Industry leaders have renewed calls on the government to reinstate tax-free shopping in the upcoming budget, highlighting the substantial impact on London’s West End and beyond. Recent figures estimate that the loss of VAT-free shopping has cost the area £310 million in just six months.

Selfridges cited additional challenges compounding its trading performance, including persistent supply chain disruptions linked to global conflicts and delays on shipping routes, inflationary pressures, exchange rate volatility, and rising costs across luxury brands. Elevated energy prices and a general squeeze on household disposable income have further dampened consumer confidence.

Despite these challenges, Selfridges is keen to stress its resilience and commitment to customer experience. The company has marked strong performance in the 2024 financial year, recording an increase of 1.2 million visitors to its stores. Refurbishments to the Oxford Street beauty hall and improvements to the Selfridges Unlocked membership programme have contributed to footfall growth. The retailer now looks to the festive season with optimism, promising a ‘magical Christmas’ and further innovative experiences for loyal customers.

The Selfridges group is jointly owned by the Central Group of Thailand and Saudi Arabia’s Public Investment Fund. Approved plans are underway at the Oxford Street store to develop an exclusive new shopping and social space for members and VIPs, although Westminster City Council has prohibited amplified music at the venue. Oxford Street itself is set for major change, with plans endorsed by London’s mayor, Sadiq Khan, to pedestrianise a prominent stretch of the shopping thoroughfare.