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House of Fraser collapse takes toll on Mulberry as losses widen

11:14 am, 7th November 2018

Mulberry had 21 concessions within the department store chain and said on Wednesday that it had taken a £2.1m provision to cover the costs of that exposure.

It had been owed £2.4m by HoF and issued a profit warning in August after the department store went into administration.

It was later rescued by Mike Ashley’s Sports Direct but the new owner has not had to honour the previous management team’s trading ties.

Mulberry also confirmed in its half-year results that it had taken a £2.5m charge on the launch of operations in South Korea.

It meant, the brand said, that it had made a pre-tax loss of £8.2m during the six months to 30 September.

That compared to a loss of £600,000 in the same period a year ago.

Mulberry said while its core UK operations remained profitable, conditions remained challenging given the weaker consumer environment in the run-up to Brexit and “sustained” increases in UK rents and business rates.

Like-for-like UK sales, which excluded House of Fraser sales, were 7% down.

It said fewer tourists – who had flocked to the UK last year amid weakness for the Brexit-hit pound – were also a factor in its domestic market struggles.

International sales rose 13%.

The company said it was looking to bolster momentum through a new flagship concept store in London’s Regent Steet which opened in September and another new store in Heathrow’s Terminal Four.

It also announced a concessions deal with John Lewis, boosting their partnership from a purely wholesale arrangement.

Shares – down 70% this year – were 4.5% higher in Thursday trading.

Chief executive Thierry Andretta said: “We are delivering on the strategy to develop Mulberry as a global luxury brand with new subsidiaries in Korea and Japan, the creation of digital partnerships in China and the additions to our own store network in Asia.

“In the UK, our most important market, we are pleased to have signed a concession agreement with John Lewis & Partners, advancing our direct to consumer reach.

“We are proud to be the largest manufacturer of luxury leather goods in the UK and remain committed to supporting “Made in England” through our two Somerset factories.

“We are confident that our focus on international growth is the correct strategy to develop Mulberry. We are well positioned for the Christmas trading period, which as ever, will determine our full year result.”