Burberry Group to delay UK plant amid EU fallout

Burberry Group’s plan to build a new £50m (€59.7m) weaving facility in the UK is on hold as the luxury-goods maker assesses the impact of the country’s Brexit vote.

The company, which shook up its top management ranks earlier this week, still plans to go ahead with the plant in Leeds, England, though is being “very cautious” on its investment plans, chairman John Peace said after its annual meeting in London.

“We’ve certainly put it on hold for the moment, but that might be for a very short period of time,” Peace told reporters.

“It depends on how events unfold. It’s not in terms of reversing our decision to do it or not. But it’s the speed at which we invest.”

Burberry announced in November that it planned to build the facility, which will employ 1,000 people and be dedicated to production of its famed trenchcoats.

Work was due to start this year and be complete by 2019.

The Brexit vote has led to delays on a decision on the expansion of London’s Heathrow airport and on the government’s sale of its stake in Royal Bank of Scotland Group Plc.

“Every day is a lifetime at the moment in terms of news flow,” Burberry’s Mr Peace said.

The group known for its camel, red and black check design incurs about 40% of its costs in Britain, but makes only 10% of its sales in its home market and more than half of those come from foreign tourists in London, analysts estimate.

It said its adjusted profit for the year would be boosted by about £90m (€108m) if exchange rates remain at current levels, compared with a previous forecast of £50m.

The pound has fallen to 31-year lows since the UK voted on June 23 to leave the EU.

Burberry’s sales in Britain picked up in its first quarter, through June 30, but the company had said it was too early to assess any impact of the Brexit vote on demand.