Burberry warns against no-deal Brexit and confirms its commitment to Yorkshire manufacturing

Burberry's Spring/Summer 2019 show
Burberry's Spring/Summer 2019 show
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Luxury fashion chain Burberry has said a no-deal Brexit would be bad news for the firm and it would cost tens of millions of pounds if it has to operate on WTO rules without taking mitigating action.

The firm is already taking action in case of a no-deal and is looking at ways to minimise the impact over time.

Burberry's chief operating and financial officer Julie Brown said a no-deal would mean the firm loses the favourable terms it has as part of the EU.

She said this would lead to "material headwinds" on profits although the firm is taking action to minimise the hit.

"It would be very complex to manage," she said.

"The main concern is disruption to the supply chain. If there are border checks in place it would lead to disruption.

"Our objective is we achieve a deal relating to Brexit. It's the best outcome for business."

Ms Brown said that whatever happens with Brexit, Burberry is committed to the UK and its manufacturing sites in Yorkshire..

"We are committed to the UK and we are very proud to be British," she said.

"We are very committed to manufacturing in the UK and at our sites in Castleford and Keighley."

She said the firm is very pleased with the progress of its Burberry Business Services site in Leeds, where it employs over 350 people.

"We are very committed to Leeds and we are delighted with the progress of Burberry Business Services," she added.

The office at 6 Queen Street in Leeds city centre has brought together teams from finance, HR, procurement, customer services and IT.

Ms Brown said that there are no plans to develop the 10 acres of land it owns in Leeds next to the Grade I listed Temple Works building. In 2017, Burberry let an option lapse on the building in Leeds' South Bank. The firm still owns the land in Leeds.

Ms Brown was speaking as Burberry reported a rise in festive sales and brushed aside fears of a slowdown in China.

The group said like-for-like global sales rose 1 per cent over the 13 weeks to December 29, with mainland China seeing a "mid-single" digit increase.

It comes amid slowing growth in China and fears of a sharp correction as the threat of a trade war between China and the US weighs on consumer sentiment.

In its latest update, Burberry said it saw a consistent performance across all its regions, with the division including Europe also seeing a "small" improvement in tourist spending quarter on quarter.

But US sales were hit by falling numbers of shoppers hitting the stores in its third quarter.

Marco Gobbetti, chief executive of Burberry, said: "I am pleased with our progress in the quarter as we continued to build brand heat around our new creative vision and shift consumer perception of Burberry."

"We will continue to manage the business dynamically as we reposition the brand. We confirm our outlook for the full year," he said.

He added that "excitement is building" ahead of next month's runway collection due from new creative director Riccardo Tisci, after a number of his limited editions were well received.

In the Christmas quarter, Burberry said total retail revenues fell 1 per cent on a reported basis and dropped 2 per cent with currency movements stripped out.

The group is targeting high-end shoppers and revamping its stores, with another 10 due to be completed by the end of its financial year.