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  HOME | Business & Economy (Click here for more)

Mulberry Shares Tumble on Profit Warning from House of Fraser Woes

MADRID – Shares in Mulberry Group PLC tumbled in early trade Monday after it warned that it will take a 3 million pounds ($3.8 million) one-off hit following House of Fraser’s collapse into administration.

The maker of leather handbags also said that if tough trading conditions on the UK high street continue into the second half of fiscal 2019, then profit for the full-year will be “materially reduced.”

Mulberry shares fell as much as 30 percent to 400 pence, its worst percentage fall since January 2014, according to FactSet.

The luxury fashion company expects to book an exceptional charge of 3 million pounds sterling for the six months ended Sept. 30 to cover costs that may result from restructuring after House of Fraser called in administrators and was then bought by Sports Direct International PLC on Aug. 10 for 90 million pounds sterling.

Mulberry, which operates 21 House of Fraser concessions, said the UK market has continued to remain challenging and sales in House of Fraser stores have been particularly affected.

The company’s profit warning comes after it said in June that sales were down due to lower footfall and fewer tourists coming to Britain.

Rebecca O’Keeffe, head of investment at Interactive Investor, said that there is no doubt that House of Fraser’s woes have compounded Mulberry’s problems, but underlying UK issues of reduced footfall and tourists are deep rooted.

“The company is trying to shift its focus internationally and that is helping to mitigate falls in UK demand, but the sustained problems in the UK can’t be ignored,” she said.

Mulberry said its business in the rest of the world is developing broadly in line with its expectations.

The company has been expanding its business into Asia over the past two years and it has recently established a joint venture in South Korea with its distribution partner.

At 0916 GMT, Mulberry shares were down 119 pence, or 21 percent, at 450 pence.

 

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