Burberry warns of 'tens of millions' hit risk from no-deal Brexit
Burberry on Wednesday sounded the alarm over a no-deal Brexit, with Britain’s largest luxury goods firm warning it will be “complex” and could cost it tens of millions of pounds.
The FTSE 100 fashion designer, which has so far kept its cards close to its chest on Brexit, today used its third-quarter update as an opportunity to outline how it could be affected after March.
Finance chief Julie Brown admitted crashing out of the EU without a deal could be bad for the business, and said: “It would be very complex to manage.”
She warned switching to new trade tariffs will cost the brand, known for its trademark trenchcoats, in the “low tens of millions of pounds” a year, although it hopes to mitigate the hit.
Brown also said: “The issue is the operational complexity. The biggest concern is disruption to supply chain… [a no-deal] can impact the speed in which we can deliver to customers.”
The firm, which transports a number of finished goods and samples between Britain and the Continent, is trying to take actions to ensure continuity, including increasing some inventory levels.
The comments came on the same day Liam Fox, the Brexiteer international trade secretary, said a no-deal is “a real possibility”.
Speaking to the BBC in Davos at the World Economic Forum, Fox said delaying or cancelling Brexit would be a “calamitous” breach of trust with the electorate and worse than leaving the EU with no deal.
Brown said: “We still remain very hopeful that an outcome can be achieved that delivers the closest possible relationship with the EU.” She stressed that the company is committed to the UK.
Brexit planning is among a number of challenges Burberry had to grapple with in the 13 weeks to December 29.
During the period it had to temporarily close some shops in France as anti-government yellow-vest street protests took place in Paris and other cities, and it also pointed to weaker footfall in the Americas.
Group revenue fell to £711 million from £719 million, but Burberry increased comparable sales by 1%.
It cheered demand for a limited-edition collection it did with Vivienne Westwood, with some items selling out within hours, and said Burberry’s Belt bags, tops and trousers were selling well.
Chief executive Marco Gobbetti said: “I am pleased with our progress in the quarter as we continued to build brand heat around our new creative vision.”
The company confirmed its outlook for the full year.
Riccardo Tisci was appointed as creative chief last year. Gobbetti said today: “Excitement is growing ahead of next month’s launch of Riccardo’s debut collection.”
