Shares in Mulberry plummeted as much as 30 per cent this morning as it said that the restructuring of House of Fraser could cost it around £3m.
The luxury leather goods brand, which operates 21 concessions in HoF stores, said that sales in the department stores had been particularly hard-hit by challenging retail conditions in the UK. It added that its profit was likely to be “materially reduced” if the tough backdrop persists.
Following the administration of HoF and its subsequent acquisition by Mike Ashley's Sports Direct earlier this month, Mulberry has evaluated the impact on its full-year results and estimated £3m in exceptional costs for the six months to September 2018.
Shares took a dive in early trading, reflecting what analyst Neil Wilson of Markets.com said was “a sign of how it’s not just the retailers that are affected by the decline on the high street, but also some of the key brands that depend on department store concessions and the visible presence they offer to consumers”.
Ashley has promised to keep around 80 per cent of House of Fraser stores open, but the chain collapsed owing millions to suppliers and concession operators.
The company owed a total of £484m to its creditors as it filed for administration.
Read more: House of Fraser was almost sold for just £1