Mulberry losses widen as it takes £2.1m hit from HoF collapse

Interim losses at luxury handbag maker Mulberry widened while revenues slid as the company took a hit from the collapse of House of Fraser.

In the six months to 30 September, underlying pre-tax losses deepened to £3.6m from £0.6m in the same period a year ago as the group incurred one-off costs of £2.1m due to the HoF collapse and £2.5m for its launch in Korea.

Total revenue declined 8% in the half to £68.3m and net cash was £12.1m versus £16.4m last year.

On a like-for-like basis, UK retail sales were down 7%, but total UK retail sales including House of Fraser were 11% lower. Meanwhile, international sales were up 13% to £12.4m as the company benefited from revenue generated in China, Taiwan, Hong Kong and Japan following the acquisition of these key Asian territories and expansion of the store network.

As far as current trading is concerned, UK retail LFL sales were down 7% in the six weeks to 3 November and Mulberry said it expects to make an underlying pre-tax profit for the year to 31 March 2019, excluding one-off costs.

Chief executive officer Thierry Andretta said: "We are 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 the additions to our own store network in Asia.

"In the UK, our most important market, we are pleased to have signed a concession agreement with John Lewis & Partners, advancing our direct to consumer reach. We are proud to be the largest manufacturer of luxury leather goods in the UK and remain committed to supporting 'Made in England' through our two Somerset factories."

Andretta said the group is well positioned for the Christmas trading period, which as ever, will determine the full year result.

At 0930 GMT, the shares were down 3.9% to 299p.