Burberry Group PLC will take over a luxury leather goods business from its longtime Italian leather goods partner CF&P, the company said in a statement May 14.
The deal is expected to close later this year, after which CF&P employees, including a team of craftsmen who have worked closely with Burberry, will transfer to the company.
Burberry said the acquired operations will remain at the current site.
The acquisition will create a "centre of excellence for Burberry's leather goods, covering all activities from prototyping, product innovation, engineering and the coordination of production," Burberry CEO Marco Gobbetti said.
Financial details of the arrangement were not disclosed.
In a May 14 research note, Jefferies analyst Flavio Cereda said Burberry's "messy supply chain is an area of concern and moves to redress this are welcome," after Italian newspaper Corriere della Sera first reported the deal.
"The challenge for Burberry in launching its new medium-term strategy to climb back up the luxury pyramid has been the fact that it is inherently weak in a core product area: leather goods," Cereda wrote.
Burberry did not immediately respond to S&P Global Market Intelligence's request for comment.
In November 2017, the company revealed plans to reshape its offerings by increasing and invigorating its fashion content and creating compelling luxury leather goods and accessories.
