The luxury fashion brand said it is considering whether to develop the 10 acres of land it owns next to the building or whether to maintain the sites it currently owns at Castleford and Cross Hills in Yorkshire. Another option would be to build a new green field site.
The Temple Works building would have involved an initial investment of over £50m in the heart of Yorkshire and was expected to provide permanent employment for more than 1,000 people.
The news that the site will not be used will come as a blow to Leeds’ South Bank. The plans were put on hold after the Brexit referendum last year.
Julie Brown, chief finance officer of Burberry, said: “We have decided not to push ahead with the Temple Works building. We have let the option lapse. We have a programme of refurbishment for our other sites in Yorkshire.
“We are very committed to Leeds. We have chosen Leeds as the home for Burberry Business Services. We looked at overseas sites but because of our heritage in Yorkshire we chose Leeds.”
Burberry owns a development site of just under 10 acres and an adjacent vacant building at Holbeck, South Bank. The firm said it had an option on the neighbouring Grade 1 Temple Works building (sized at just under three acres) which has now lapsed.
“Our options could involve an additional manufacturing facility,” said Ms Brown.
“We want to analyse the best options for the company. A new building is still being considered. We have put the plan on hold. We’ve decided to take our time. There is no pressing urgency.”
Burberry said it will consider the three options and make a decision in a year or so.
Following the news, Councillor Judith Blake, leader of Leeds City Council, said: “Burberry have assured us that their proposal to create a factory in Leeds is still on the table and we will continue to work positively with them to achieve that.
“Their original site adjacent to Temple Works is still very much in the mix and we also have other options available. We’re also looking forward to welcoming the relocated Burberry business support centre, bringing together much of their international and UK support services, along with 300 jobs, to Leeds later this year.
“Clearly it is disappointing that they are no longer pursuing the option of developing Temple Works, but we have been actively working on securing a sustainable and appropriate future use for what is one of the largest and most magnificent Grade I listed buildings in the North of England.”
A spokesperson for Burberry said: “In November 2015, we announced plans to develop a new manufacturing and weaving facility in South Bank, Leeds. Our plans also included an option to acquire the Grade I listed Temple Works building.
“We retained this option whilst carrying out a detailed appraisal of the Temple Works building which has now been concluded. This option has lapsed.
“There is no change to our commitment to manufacturing in Yorkshire. As we have said before, we are taking a moment to think through our plans for the manufacturing and weaving facility in Leeds. We remain committed to the city and the region as indicated by our recent announcement to open a shared services office in the centre of the city in October.”
This shared services office at 6 Queen Street will house 300 staff who have been offered relocation from London. Ms Brown said it was too early to say how many staff will opt to move to Leeds.
Burberry first announced plans for the iconic Temple Works building in November 2015. The manufacturing site would have housed the 800 Castleford and Cross Hills workers and created 200 new jobs and was supposed to be completed in 2019.
Burberry employs around 700 staff in Castleford and around 70 in Cross Hills. The plan was to hand the Cross Hills and Castleford sites back to the local community, so they could be used for regeneration schemes.
The first phase of development was supposed to be the redevelopment of an area of the South Bank site to create a new facility that would have increased capacity for trench coat production, introduced more efficient ways of manufacturing, and the potential to develop and produce other products at the site.
Later phases of development had included plans to restore and renew the Grade I listed Temple Works building.
The project was announced in 2015 by former chief executive officer, Christopher Bailey, who was born in Halifax.
He said at the time: “I am delighted to announce that the next chapter of Burberry’s manufacturing story will be right here in Yorkshire. Burberry is a proudly British brand and we are so excited that our plan for a new site in South Bank, Leeds, means that we will continue to produce our most iconic product – the trench coat – in this wonderful part of the country for many years to come.”
The news about Temple Works came as new Burberry chief executive Marco Gobbetti unveiled rising first quarter sales, driven by strong performances in China and in the UK.
The company reported a 3 per cent increase in retail sales to £478m in the three months to June 30, while like-for-like sales rose 4 per cent in the first set of results under Mr Gobbetti.
Revenue was helped by the UK, where the weaker pound lifted sales, although Burberry said it saw a “deceleration” of this trend towards the end of the quarter.
Mr Gobbetti said: “I am delighted to have started as Burberry CEO. We are pleased with our performance in the first quarter, while mindful of the work still to do.
“This is a time of great change for Burberry and the wider luxury industry.
“I look forward to building on the foundations Christopher (Bailey) and the team have put in place and creating new energy to drive growth.”
Mr Bailey stepped down as chief executive earlier this month, becoming president and chief creative officer as part of an overhaul.
The company has announced plans to deliver at least £100m in cost savings by 2019 as part of a turnaround plan to be carried out by Mr Gobbetti, and Burberry added that it is on track to deliver £50m in savings in 2018.
On Thursday, Mr Gobbetti will face shareholders at the group’s AGM amid a fallout over Burberry’s executive pay plan that will see Mr Bailey pocket a £5.4m share award.
Royal London Asset Management earlier this week added its voice to investor advisory groups Pirc, Institutional Shareholder Services and the Investment Association in criticising the firm’s remuneration policy.
Royal London said it will vote against the firm’s pay report and against the re-election of remuneration committee chairwoman Fabiola Arredondo.