Burberry scraps new UK factory despite sales pick-up

British luxury fashion house designer, Burberry Group has dropped plans to redevelop a site in Leeds as a new factory, despite sales figures rising unexpectedly by more than 4% in three months.

Burberry sales figures rose by 4% in the past three months mainly because the sales in China increased by 15% - image courtesy of Flickr (Robert Sheie, CC BY 2.0.).
Burberry’s sales figures rose by 4% in the past three months mainly because the sales in China increased by 15% – image courtesy of Flickr (Robert Sheie, CC BY 2.0.).

Burberry has scrapped the plan to revive the Temple Works mill in Leeds with a £50m factory investment and delayed the decision on whether to build a factory for another year despite increasing sales in the UK and in China this year.

The latest Burberry announcement showed that sales figures rose overall by a better than expected 4% in the past three months to £478m, mainly because sales in China increased by approximately 15%, as chief operating and financial officer, Julian Brown, stated.

He explained: “Chinese consumer confidence continued to build, and there had also been a rise in Chinese shoppers heading to Hong Kong, after a long period of decline.”

Although China is the most successful market in absolute numbers, the UK remains Burberry’s fastest growing market, as international travellers continue to take advantage of the drop in the value of the pound since last year’s vote to leave the European Union.

Brown continued: “Although growth had slowed from the 30% to the 40% seen last year, as 2017’s rise in tourist spending was being compared against the post-referendum leap from June 2016, local spending remained high.”

Luxury leather goods and a new lightweight version of the classic trench coat, designed for tropical climates, led the growth. Burberry’s backpacks were the best seller, overtaking the Banner bag.

Brown concluded that, despite the rising sales figures, the plan for a new factory was on hold as Burberry was still considering a number of options for the future, including refurbishing its existing factories in Castleford and Keighley, developing a site it owns beside Temple Mill, or building on an alternative greenfield site.

Brown said the company remained committed to Leeds, where it’s in the process of moving around 300 head office roles from London.