Burberry commits to £50m Yorkshire facility

UK sales leapt 40 per cent in the three months to December 31, partly due to the weak pound which has attracted overseas shoppers on the hunt for a bargain.

When asked about the timing of the new Leeds site following previous delays, Charlotte Cowley, Burberry’s director of investor relations, told The Yorkshire Post: “We are still fully committed to Yorkshire. We are making sure we get everything right.”

She refused to be drawn on whether the site will open in 2019, as initially planned, or later.

The firm announced last year that it was to create a new facility in Leeds to produce its iconic trench coats, relocating its existing staff in Castleford and Keighley in the process.

Burberry has said the site will employ more than 1,000 people when it is completed.

Ms Cowley said UK stores have seen growth from both travelling luxury customers from all regions and from domestic customers in Britain.

She estimated that the split between tourists and UK buyers is 50/50 and said that the Christmas trading quarter is always strong for domestic buyers.

Burberry said that a well-received advertising campaign had helped drive strong demand from UK customers.

It said that its UK performance contributed to a 3 per cent rise in overall comparable sales across the group in the three months to December 31, with an improvement in some under-pressure markets including Hong Kong and France.

Christopher Bailey, chief creative officer and outgoing chief executive of Burberry, said: “With a record number of views of our festive film and strong demand for new products in our collections, this third-quarter improvement reflects early progress from our plans to drive Burberry’s performance for the long term.”

Burberry said it returned to growth in Asia Pacific over its Christmas quarter, with “high single-digit percentage” sales growth in China and narrowed sales falls in Hong Kong.

Trading remained weak in Continental Europe, according to Burberry, but it said France saw better trading compared with the previous three months.

Its festive best-sellers included its Banner handbags, rucksacks, bridle bags and military jackets.

The group attracted more than 22 million viewings for its Christmas campaign short film, starring Sienna Miller and Dominic West, which celebrated the life of its founder, Thomas Burberry.

The third-quarter sales rise marks a welcome recovery under a turnaround plan that has included simplifying the product line, revamping its digital store and cutting costs.

Mr Bailey will become president and chief creative officer. The group confirmed that his successor, Marco Gobbetti, will join the company on January 27, initially holding the role of chairman for Asia Pacific and Middle East until becoming chief executive in July.

Analyst Tom Gadsby at Liberum said: “We agree with the market view on Burberry’s prospects for 2017 and 2018 with an foreign exchange led recovery this year and mid-single digit profit growth in 2018.

“In the longer term our EBIT forecast for 2019 is 6 per cent below consensus as we do not believe that Burberry will be able to deliver the planned costs savings to the bottom line, rather that savings will have to be reinvested in the customer proposition. Certainly there is a risk that new management will take a similar view for the need to re-invest cost savings.”