Burberry flagship: new chief to make decision
Future of Leeds facility still shrouded in doubt
LUXURY FASHION firm Burberry said it was too early to say whether it will go ahead with its planned state-of-the art flagship manufacturing and weaving facility in Leeds, saying that it needs to consider the Brexit impact.
When asked whether the plans could be scrapped, Julie Brown, chief finance officer of Burberry, told The Yorkshire Post: “It’s a very important decision for Burberry. It’s too early to say.
“Clearly, we have had a number of management transitions and we have a new CEO starting in July. It’s a big decision for Burberry.
“We are considering the implications for Brexit.”
She added that the group is committed to its operations in the region.
“We are very committed to Yorkshire. We have excellent facilities already there,” she said.
The firm announced in late 2015 that it would move its Castleford and Keighley staff to Leeds’s South Bank.
Work on the facility was originally due to begin last year, set to be completed in 2019, but the Brexit vote scuppered the plans and the move has been placed on hold.
It is now thought that incoming chief executive Marco Gobbetti will make the final decision on whether to open the new site or scrap the plans and keep the existing operations in Castleford and Keighley.
Ms Brown was speaking as Burberry announced a 21 per cent fall in annual underlying pre-tax profit to £462m following weak wholesale trading in the US.
However, Burberry has benefited from the fall in the pound following the vote to leave the EU, which boosted operating profits by nearly £130m.
Including the fillip from the weak pound, underlying profits rose 10 per cent, while Burberry cheered ongoing “exceptional” sales in the UK thanks to the boom in spend on luxury goods from tourists.
The group cautioned the benefit from the pound would begin to fade later this year, which will hit profits in the new financial year by around £30m.
Outgoing chief executive Halifax-born Christopher Bailey said: “2017 was a year of transition for Burberry in a fast-changing luxury market.
“The actions we have taken to lay the foundations for future growth are yielding early benefits and I remain confident that these will build over time.”
The full-year results outline the challenges facing new boss Marco Gobbetti, who takes on the top role in July, when Mr Bailey will step aside to become president and chief creative officer.
Burberry said the weak pound flattered full-year revenues, which rose 10 per cent to £2.8bn, but sales fell 2 per cent at constant exchange rates.
Store sales, which make up 77 per cent of revenues, rose 1 per cent on a like-for-like basis after a 3 per cent rise in the final six months, with the UK leading a double-digit sales hike across the Europe, Middle East, India and Africa region.
But underlying wholesale turnover fell 14 per cent and licensing sales slumped 48 per cent.
This was offset in part by efforts to slash costs across the group.
Burberry has been leading a turnaround plan that has included simplifying the product line, revamping its digital store and cutting costs.
It has also moved to license out its beauty range as part of a new partnership with make-up brand Coty.
It’s a very important decision for Burberry. Julie Brown, chief finance officer for Burberry