New Burberry plant in Leeds will boost long-term prospects, says chief

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Luxury brand Burberry’s decision to create a £50m manufacturing and weaving facility in Leeds will help to boost its long-term prospects, according to the company’s chief financial officer.

Burberry plans to employ more than 1,000 people at a new base for its heritage trench coat in the heart of Leeds.

Carol Fairweather, the company’s chief financial officer, said yesterday: “We’re a UK business, and it’s very important that we retain manufacturing in the UK.”

Burberry said that work on the site, in the South Bank of Leeds, is due to begin in 2016 and the facility is expected to be completed in 2019. The new facility will replace the two existing manufacturing and weaving centres in Castleford and Cross Hills, in West Yorkshire.

The plan is for all the teams from Castleford and Cross Hills to move to the new site, bringing all employees together under one roof.

The company employs 700 staff in Castleford and around 70 in Cross Hills.

Yesterday, Burberry defied economic woes in China to post better-than-expected half-year figures and said sales had started to bounce back.

But the trendy trench coat maker warned conditions remain “challenging” as growth in the world’s second biggest economy slows.

Chief executive Christopher Bailey, who was born in Halifax, said “decisive action” helped underlying pre-tax profits rise by three per cent to £153m in the six months to September 30, against market forecasts for a fall. It added that like-for-like sales improved in its third quarter after a dire end to the first half.

The group expects to see “mid single digit” growth in same-store sales in the final six months of its year, although it cautioned conditions were “challenging and uncertain”.

Mr Bailey said: “We enter the second half mindful of this backdrop, but confident in our strongest-ever festive plans.”

The forecast-beating interims and sales will relieve some of the pressure on Mr Bailey, who has battled against tough trading since taking over at the helm last year, with shares in the group tumbling by 25 per cent over the past six months.

Burberry, which makes around a third of its sales from the Asia Pacific region and has a significant presence in China, has been hit hard by a reduction in luxury spending by Chinese shoppers, particularly in Hong Kong – traditionally a prime shopping destination for Chinese consumers.

Shares dived last month after it revealed a four per cent slump in like-for-like sales in the second quarter, marking a sharp reversal of the six per cent rise in the previous three months.

The group has been slashing costs and overhauling products, fast-tracking best-sellers and going back to its roots by focusing on its best-known items, such as trench coats, scarves and cashmere.

Richard Hunter, the head of equities at Hargreaves Lansdown Stockbrokers, said: “Given a disappointing trading update last month, expectations were low for these numbers but Burberry seems to have pulled the rabbit out of the hat. Revenue has held up and adjusted profit has shown a modest improvement, which is an achievement given the headwinds being faced in the Asian region, and China in parti- cular.

“Within the metrics, earnings per share are also stronger year on year, the dividend has been hiked as an indication of the company’s belief in its prospects, whilst the balance sheet retains a healthy net cash position.

“Burberry is particularly confident in the imminent Christmas season, with its star studded festive film already leading the way in terms of advert- ising.”