Mulberry shares crash 30% as House of Fraser collapse costs the luxury bag-maker £3m


Mulberry became the first House of Fraser concession partner to come clean on the cost of the department store chain’s collapse today, admitting that its bottom line would be dented by around £3million.  

The upmarket bag-maker said its half-year profits ‘will be materially reduced’ as a result of flagging UK sales, particularly in House of Fraser, where it operates 21 concessions and employs 88 people.

The profit warning caused Mulberry’s shares to crash by nearly a third in early trade to around £4 per share. 

Mulberry said weak UK trading will drag on its bottom line in the six months to September 30

Mulberry said weak UK trading will drag on its bottom line in the six months to September 30

Mulberry said weak UK trading will drag on its bottom line in the six months to September 30

In the unscheduled announcement to shareholders, the brand said: ‘Since the group reported in June 2018, the UK market has continued to remain challenging and sales in House of Fraser stores have been particularly affected.

‘If these sales trends in the UK continue into the key trading period of the second half of the financial year, the group’s profit for the whole year will be materially reduced,’ Mulberry said.

House of Fraser collapsed into administration earlier this month, before being snapped up in a pre-pack deal by Mike Ashley’s Sports Direct for £90million.

Although Ashley has reversed House of Fraser’s store closure plans and vowed to keep as many branches open as possible, it is yet unclear how many shops he will keep or what terms he will offer to concession partners.

Mulberry was owed about £2.4million at the time of House of Fraser’s collapse but is unlikely to get much, or any, of that money back.

Given the nature of the takeover, Ashley is not obliged pay unsecured creditors, including suppliers, landlords and the pension fund, for debts prior to the acquisition.   

Fellow listed concession partners, ScS and Quiz, are yet to reveal the impact of House of Fraser’s temporary insolvency, but documents published by administrator AY last week showed that upmarket brands like Prada, Armani and Diesel are among the worst effected, with millions of pounds worth of debt likely to go unpaid. 

Mulberry pointed out that trading in the rest of the world continues to develop ‘broadly in line’ with management’s expectations, and said it has a ‘strong cash position’.   

‘Today’s announcement is a reminder that the victims of the current high street malaise in the UK do not just include the retailers themselves,’ said AJ Bell investment director Russ Mould. 

‘The business model of the big department stores has looked under pressure for some time thanks to the shift towards online shopping, but they did at least showcase a variety of brands in an attractive setting.

‘Losing this literal shop window for products could be a test for the likes of Mulberry and, in particular for their brand power.’


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