Burberry shelves plan for clothing factory in Leeds
BURBERRY has shelved plans to develop a flagship manufacturing factory in a listed building in Leeds.
The firm – which pledged £50m to revive the Temple Works mill in Leeds back in 2015 – said it would no longer be renovating the building, in order to control costs.
The factory was set to be the main site for the production of the Burberry trench coat, creating about 200 new jobs in the city from 2019.
But Julie Brown, chief finance officer, said the firm had ‘decided to let the option lapse’ after deciding it would be too expensive to renovate. While Burberry still has land in Leeds, it will have to build a factory from scratch.
But the firm is understood to be assessing whether to press ahead with the idea or scrap it.
In an update Burberry said: ‘In 2015 we announced plans to develop a new manufacturing and weaving facility in South Bank, Leeds. Our plans included an option to acquire the Grade-I listed Temple Works building. We retained this option whilst carrying out a detailed appraisal of the building which has now been concluded. This option has lapsed. There is no change to our commitment to manufacturing in yorkshire.
‘We are continuing to think through our plans for the manufacturing and weaving facility in Leeds.’
The announcement came as the retailer unveiled betterthan- expected first quarter results helped by strong British trading and a rebound in Chinese spending.
Retail sales rose 3pc to £478m in the three months to the end of June, while sales at shops open for more than a year were up 4pc.
Burberry managed to reinvigorate its sales in China by ramping up the advertising on its hugely successful WeChat social media app, which has nearly a billion users in the country.
The move helped buoy sales of its tropical gabardine trench coat and DK88 bag. Burberry’s strong performance comes as it faces a backlash from shareholders at its annual general meeting today – over awards for the former chief executive Christopher Bailey and new finance director Julie Brown.
Brown was due to get a large share award to make up for the bonus she lost leaving Smith & Nephew but handed back up to £2.4m worth of shares after shareholder advisory group ISS pointed out that Smith & Nephew executives had received a smaller award than the one the Burberry board assumed she was giving up.
Bailey, who waived his bonus for the last two years and deferred some of the 1m shares he was awarded in 2013 prior to his appointment as boss, has also come under fire over his share awards.
As well as ISS, the advisory groups Pensions & Investment Research Consultants and The Investment Association have urged shareholders to vote against Burberry’s remuneration report.