Mulberry Hit By House Of Fraser Downfall
After the recent collapse of popular department store, House of Fraser, Mulberry have become the first concession partner to announce the damaging effects on their profits. In an unscheduled announcement to their shareholders, the brand warned that its half-year profits will be significantly reduced because of poor UK sales, particularly in House of Fraser, where it operates 21 concessions and employs 88 people.
“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 fell into administration earlier this month before being bought by Sports Direct tycoon, Mike Ashley, for £90m. Although Ashely announced he would try to keep as many stores open as possible, it is yet unclear what terms he will offer to concession partners and it is believed that Mulberry were owed around £2.5m at the time of the department store’s collapse; and it is highly unlikely they will see any of this money soon.
Yesterday, Mulberry announced, “The group is in a strong cash position and continues to follow its strategy to develop Mulberry into a global luxury brand. Over the past two years the group has enhanced the international network, particularly in Asia, and will continue to invest in the omni-channel experience and marketing across its international markets.”