Mulberry says House of Fraser store closures impact will be 'close to zero' as it announces South Korea tie-up

Mulberry Korea will have its head office in Seoul
Mulberry is looking to Asia for growing sales with a new tie-up in South Korea (Source: Mulberry)

Mulberry said the closure of its concessions in a handful of House of Fraser stores will have "close to zero" impact on its UK sales, as the brand ramped up international operations today.

Chief executive Thierry Andretta told City A.M. that although five concessions will close as a result of House of Fraser's dramatic restructuring plans, consumers will still be able to buy the products at other locations.

"It's a pity that they are closing their Oxford Street store, but in Oxford Street we today have Selfridges, we have John Lewis," he said. "We will soon have Regent Street and we have Bond Street. The impact of their closing on us will be close to zero."

Meanwhile Mulberry is turning its attention to the Asian market in the midst of sluggish UK sales.

The company will set up a new business in South Korea in a tie-up with SHK, plugging in £4.6m to develop what will be called Mulberry Korea.

Mulberry will own 60 per cent of the share capital of the newly created entity, with SHK owning the remaining 40 per cent stake, and it is expected to start trading by autumn 2018.

Mulberry Korea will have its head office in Seoul and the luxury bag maker is expecting to incur costs of £3m during the financial year as it sets up the new business.

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Thierry Andretta, Mulberry's chief executive, said:

We are pleased to have signed an agreement with our longstanding partner, SHK. The new business will further develop the omni-channel platform in South Korea and focus on enhancing the customer experience.

Taking a direct participation in this important market for luxury goods marks a key milestone in our international development strategy. We look forward to celebrating the new business with an exciting customer event in Seoul during September.

The current network consists of 18 places to buy Mulberry, including concessions, outlets and duty free, and the company said the Korean site and omni-channel platform will form part of the new business too.

Inn Shick Lee, chairman at SHK, said: "The new partnership will offer the opportunity to broaden the product range and provide greater service to the customer. Mulberry is at an exciting moment and we are delighted to enter this next phase to further develop this great British brand in South Korea."

The news from Mulberry came alongside its results for the year ended 31 March, reporting a dip in reported profit profit before tax - from £7.5m last year to £6.9m, with start up costs relating to new Asia subsidiaries.

Revenue rose one per cent to £169.7m, with retail sales up three per cent and international up by a fifth.

For the 10 weeks to 2 June, retail like-for-like sales fell seven per cent due to weak demand in Britain.

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