Mulberry shares plunge 30% as luxury bag maker takes hit from House of Fraser collapse

Department store chain's collapse to cost Mulberry £3m

Ben Chapman@b_c_chapman
Monday 20 August 2018 13:25
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House of Fraser to shut 31 stores and put 6,000 jobs at risk

Mulberry shares crashed by as much as 30 per cent on Monday following the collapse of House of Fraser.

The designer handbag company, which operates 21 concessions at the high street store, warned profits would also take £3m hit due to flagging UK sales.

“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.

Following the initial crash, Mulberry’s share price regained some ground to trade down 16 per cent at 480p.

House of Fraser’s collapse earlier this month has left a host of suppliers nursing losses.

Mike Ashley’s Sports Direct bought the chain but he does not have to repay unsecured creditors such as suppliers as part of that deal, meaning that hundreds of millions of pounds of debts are likely to go unpaid.

A report from administrators EY showed Ralph Lauren was owed £9.4m, Barbour £3m and Mulberry £2.4m, among a host of other brands which have been left out of pocket

Mr Ashley has said the department store chain was lacking in big-name brands and that he wants to bring in names like Gucci and Prada to create a “Harrods of the high street”.

The Sports Direct founder has also said he will keep the majority of House of Fraser stores open but it is not yet clear which sites will shut.

The House of Fraser website, which was taken offline last week, is now directing shoppers to the website of Flannels, the luxury brand Mr Ashley bought in 2012.

Mulberry said on Monday that beyond the UK market, business continues to develop “broadly in line” with management’s expectations, adding that it has a “strong cash position” and has developed its international network, particularly in Asia.

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