LONDON – Revenues and profits at Mulberry suffered a blow in the first half following the collapse of department store House of Fraser and an increasingly tough environment in the U.K.
Losses widened to 5.3 million pounds from 348,000 pounds in the six months to Sept. 30 as revenues fell 8.4 percent to 68.3 million pounds, compared with the corresponding period last year.
In August, Mulberry had issued a profit warning just weeks after Mike Ashley purchased House of Fraser out of bankruptcy. Mulberry, which operated 21 concessions at HoF, said it had incurred exceptional costs due partly to the collapse and was owed millions by the retailer.
Mulberry shares plunged 30 percent following the warning. At the time, Mulberry had also flagged difficult trading on the U.K. high street, which has plagued so many British retailers.
The second half has gotten off to a slow start, with Mulberry’s like-for-like retail sales in the U.K. down 7 percent in the six weeks to Nov. 3. Despite that dip, the company said it expects to swing back into the black, reporting an underlying profit before tax, excluding one-off costs, for the full year ending March 31.
Thierry Andretta, Mulberry’s chief executive officer, said the company has been 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 additions to Mulberry’s store network in Asia.
He added that Mulberry has transitioned to a concession agreement with John Lewis in the U.K. in a bid to strengthen its direct-to-consumer reach.
“We are proud to be the largest manufacturer of luxury leather goods in the U.K. and remain committed to supporting Made in England through two Somerset factories,” he said.
Andretta added that Mulberry’s focus on international growth is the right strategy going forward, with global sales up 25 percent in the six-month period. The company was “well-positioned” for the crucial Christmas trading season, which will determine its full-year results.