Burberry Group Plc’s plan to build a new weaving facility in the U.K. is on hold as the luxury-goods maker assesses the impact of Brexit vote, the latest sign of the EU referendum eroding corporate confidence. The company, which shook up its top management ranks earlier this week, still plans to go ahead with the 50 million-pound ($66.9 million) plant in Leeds, England, though is being “very cautious” on its investment plans, Chairman John Peace said after Thursday’s 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.”
For Burberry, the Leeds decision illustrates how Brexit can be both a blessing and a curse for U.K. retailers. On Wednesday, Burberry reported an uptick in U.K. sales in the final weeks of June as visitors flocked there to take advantage of the pound’s dip. More broadly, 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.
“The result of the EU referendum is being taken into account, but our plans for a new manufacturing and weaving facility in Yorkshire remain on track,” Burberry said in an e-mailed statement. The shares declined 1.6 percent to 1,259 pence at 2:33 p.m. in London, trimming their gain this year to 5.6 percent.
The company 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. Calling the move a “possible issue of timing,” Leeds City Council leader Judith Blake said there’s “no sense at all that they’re considering reversing their decision.”
Philip Hammond, the U.K.’s newly-appointed chancellor of the exchequer, said on Thursday that the decision to leave the European Union had “rattled confidence” and that he would take “whatever measures” needed to shore up the British economy. “Every day is a lifetime at the moment in terms of news flow,” Burberry’s Peace said.