Burberry to close Spanish factory

Burberry plans to close its Spanish design facility and cut 300 jobs in Barcelona, as Spain's troubled economy means it no longer pays to produce an exclusive range of clothes for the country The Daily Telegraph reports. The closure of the unprofitable unit is inline with Burberry's strategy to amalgamate the licensed businesses it once had around the world into a single global brand.

The Autumn Winter 2010 collection will be the last that is exclusively produced for Spain, and the closure of the factory inevitably means job losses as well as a cost of Eur 50m to cut operations.

The clothes sold in Spain retail approximately 25 per cent less than the Burberry brand sold in the rest of the world. Burberry is now in talks with Spanish retailers over which shops will carry the more expensive global brand as a replacement for the local one. Department store chain El Corte Ingles is one of its biggest customers.

Spain accounts for about 9 per cent of Burberry's sales, but the company said it expects its operations in the country to make a loss this year and in the near future.

Under a process started by its previous chief executive, Rose Marie Bravo, Burberry brought back licensed businesses under central control. It had two lines in Spain, Thomas Burberry, which closed last year, and Burberry Spain. But with the Spanish economy in recession for almost two years and 20 per cent unemployment, it was no longer worth running the separate line.

Image: Burberry ad Source: Daily Telegraph