Burberry's new Leeds factory remains on back-burner as sales rise

Burberry is keeping plans to open a new factory in Leeds on the back-burner for at least another year, having delayed the proposed new facility last year following the Brexit vote. The news emerged as the British luxury house revealed retail sales up 3% on an underlying basis in the quarter to 30 June.

Retail revenue hit £478m, which was up 3% on an underlying basis year-on-year and up 13% at reported FX. The business said sales in Mainland China has improved on mid double-digit percentage basis and in EMEIA on a high double-digit percentage basis but the Americas were down on a low single-digit percentage basis.

The UK remained strong throughout the quarter, as tourists continued to take advantage of the relatively low prices as a result of a weak pound, but did show a slow-down towards the end, Burberry said.

Burberry revealed recently that it planned to relocate around 300 staff from its Horseferry Road, London headquarters to a new HQ in Leeds. However it has informed Leeds City Council that it would not be taking up an option to redevelop its grade 1 listed Temple Mill factory in the city, which would also have involved building a new factory next door.

The £50m project was part of a plan to bring all of its raincoat and textile manufacturing under one roof, but last year the plans were put on ice due to the uncertainty in the wake of the Brexit vote. Burberry CFO Julie Brown said the new site remained on the back-burner while the business, which is in the midst of a £100m cost-cutting programme, "assessed its options".

New CEO Marco Gobbetti took up his post last week, taking over from former CEO and chief creative officer Christopher Bailey. Bailey has moved into the new role of president and chief creative officer and both he had Gobbetti, who was formerly at French house Celine, will report to chairman Sir John Peace, who himself plans to leave the business by the end of next year.

"I am delighted to have started as Burberry CEO. We are pleased with our performance in the first quarter, while mindful of the work still to do. This is a time of great change for Burberry and the wider luxury industry. I look forward to building on the foundations Christopher and the team have put in place and creating new energy to drive growth," Gobbetti said.