National News

Supplied by

Mulberry warns House of Fraser collapse will hit profits

8:57 am, 20th August 2018

Mulberry, which operates 21 House of Fraser concessions, said it was expecting to take a £3m hit for exceptional costs in its next trading update for the six months to 30 September.

It comes days after administrators revealed the department store owed £484m to creditors before its collapse.

Mulberry said that UK trading “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,” it added.

House of Fraser was bought out by Mike Ashley’s Sports Direct earlier this month, but the retail tycoon has said he will not pay suppliers any money owed before his takeover.

The chain’s administrators Ernst & Young (EY) said the store owed millions to its creditors before its collapse, with companies like Versace, Gucci and Prada among the big names out of pocket.

HoF has also been forced to cancel all its online orders after a dispute with its third-party logistics company, XPO, which it owes £30m.

Mr Ashley bought HoF for £90m in a “pre-packaged administration”, which means he can drop certain liabilities through the insolvency process.

Most of the money will be used by the administrators to pay banks and bondholders.

More follows…