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LONDON, United Kingdom — Mulberry Group Plc plunged the most in two decades Monday as House of Fraser's financial collapse took a heavy toll on the luxury leather-goods and clothing maker.
Mulberry, which operates 21 concessions in House of Fraser department stores, will set aside £3 million ($3.8 million) for costs from the department store’s entry into administration, the UK-based accessory maker said in a statement. Mulberry was owed £2.41 million by House of Fraser before it went into administration, according to a document released by administrators at EY on Friday. The shares fell as much as 30 percent, the most intraday since 1998.
House of Fraser was bought Aug. 10 by Mike Ashley’s Sports Direct International Plc for £90 million after Chinese company C.banner International Holdings Ltd. pulled out of a plan to purchase the struggling chain. The department store’s suppliers were told that they would not be paid for debts owed before the deal, the Times of London reported last week.
The chain is one of many British high-street stores beset by online competition, a Brexit-fuelled spike in sourcing costs, increased staffing outlays and a squeeze on disposable incomes. Mulberry is the first operator of a House of Fraser concession to “come clean on the damage done by the collapse into administration,” Nick Bubb, an independent retail analyst, said in a note to clients.
By Lucca de Paoli; editors: Eric Pfanner, John Lauerman and John J. Edwards III.
