No-deal Brexit will cost Burberry 'tens of millions'
Britain's premier luxury brand Burberry has said a no-deal Brexit would cost it tens of millions of pounds in tariffs and severely disrupt the movement of fabrics and finished products between its suppliers, manufacturing centres and stores.
Britain is due to leave the EU in 65 days, and with Prime Minister Theresa May failing to win support for her negotiated deal, companies are increasingly worried about the possibility of a chaotic Brexit.
"We are taking mitigating actions," said CFO Julie Brown after Burberry reported a 1pc rise in comparable store retail sales for the Christmas quarter.
"If we had a no-deal scenario we would be subject to WTO rules and absent any mitigating actions our duty costs would increase materially, in the low tens of millions of pounds," she said.
The disruption to the supply chain would be even more significant, she said, because Burberry needed to move materials, samples and finished goods quickly between Britain and mainland Europe.
Burberry manufactures its trademark trench coats in Yorkshire and sources some other products, such as Italian-made suits, from mainland Europe.
"We would ensure that we allocated additional stock to the relevant areas to ensure that customers were not adversely affected, but that would clearly have an impact on the company because we would have to run with higher inventory levels," she said.
Burberry is gearing up for the arrival in stores next month of the first products by its new designer Riccardo Tisci.
CEO Marco Gobbetti said he was pleased with progress in his plan to shift the brand further upmarket, driven by the arrival of more and more products designed by Tisci.