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Burberry's new Leeds factory faces further delays

Burberry trench coat manufacturing

Burberry has confirmed it is no longer taking the site it had planned for a new £50m factory in Leeds.

The new manufacturing and weaving factory in a former flax mill in South Bank was due to open in 2019.

Burberry’s chairman first put the plans for investment in the new factory on hold in July last year, as the business assessed the impact of the Brexit vote.

Today, Burberry’s COO and CFO Julie Brown revealed that it has allowed the option on the Grade 1 listed site in South Bank to lapse, although she insisted that this did not mean the plans had been shelved.

“We are committed to Leeds but with such an important project we are thinking through our plans,” she said. “The option on that building has lapsed but we will assess our options over the next year or so. We will take our time, there is no urgency. It’s all still under review.”

Plans to build the factory were announced in November 2015. It was set to replace two facilities in Castleford, West Yorkshire, and Cross Hills, North Yorkshire. All 800 employees were expected to move to the new plant.

Over the past year Burberry has refurbished both the Castleford and Cross Hills sites.

Burberry plans to transfer around 300 roles from London to a new office in Leeds in October to further streamline costs. Brown said staff were still in consultation but she hoped the majority would make the move. 

She confirmed that the British luxury label is on track to deliver cost savings of £50m in the next financial year.

Earlier today, the business revealed that retail revenue rose 3% to £478m in the three months to 30 June 2017. Like-for-like sales were up 4% during the period, helped by a strong “double-digit growth” in the UK and growth in mainland China.

Brown said the UK had performed well but the growth trajectory had softened because of tough comparisons with last year, when the drop in the value of the pound following the Brexit vote led to a surge in sales from tourists.

Meanwhile, Korea, Italy and the Middle East remain challenging markets as a result of wider economic factors.

Fashion and accessories led the way for the brand during the quarter, and sales of bags were up by the “mid-teens” compared with 2016.

Brown said: “We’re pleased with the performance and we’re encouraged that the investment in product is resonating well with shoppers. However we’re mindful that there’s more to do on both brand and product.”

New chief executive Marco Gobbetti, who took up the post at the start of this month, has spent his first few weeks visiting the US, working on store layouts and the brand’s retail excellence programme.

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