The luxury handbag maker Mulberry has blamed tough high street conditions and the collapse of House of Fraser for widening first half losses.
The company, best known for its Bayswater and Alexa bags, slumped to a loss before tax of £8.2m in the six months to 30 September, compared with £600,000 a year ago, as the failure of House of Fraser wiped out more than £2m of profit. Overall sales fell 8% to £68.3m despite a strong showing overseas.
“The group’s UK business remains profitable although sales have been affected by the House of Fraser administration, softer UK demand and lower tourist footfall,” said its chief executive, Thierry Andretta. Sales at UK stores open more than one year, excluding House of Fraser, are running 7% down over the last six weeks.
The UK market accounts for nearly 70% of Mulberry sales and the company had already told investors it would suffer a hit on the back of House of Fraser’s administration. The department store chain’s new owner Mike Ashley’s Sports Direct is not obliged to pay the near-£1bn owed to creditors at the time of its collapse and so far only 22 of its 59 stores have been formally saved.
The House of Fraser collapse resulted in a bad debt and asset write-off of £2.1m at Mulberry with sales in the concessions and via the department store’s website “materially lower” during the period.
Mulberry, which is the UK’s biggest manufacturer of leather goods, said it had struck a new deal to open concessions in John Lewis stores – which it previously dealt with as a wholesale customer – as it seeks to rebuild its UK department store business. The deal will result in a £1.4m charge in the second half after it bought back stock from John Lewis ahead of the move.