Designer fashion brand Mulberry has issued a profit warning following the financial woes of House of Fraser. With the company, saying it expects to absorb costs of £3m due to the chain’s restructuring, the company’s shares dropped by 30% following the announcement.
Mulberry operates 21 House of Fraser concessions, employing 88 people across the UK as part of the fashion brand’s global store and digital network.
The company said it issued the warning following “a review of debtor balances, fixed assets and potential costs that may result from restructuring”.
According to Mulberry the UK retail market has remained challenging saying that its sales in House of Fraser have been particularly affected.
Mulberry said that it expects the group’s profit for the whole year will be “materially reduced” if current sales trends continue.
Despite the profit warning Mulberry said it was in a “strong cash position” and added it would continue to invest in international markets.
Although 70% of Mulberry’s revenue comes from the UK, the group says that trading in the rest of the world “continues to develop broadly in line with management’s expectations”. Recently the company established Mulberry Korea alongside its distribution partner as part of its strategy to become a global luxury brand.