LONDON, United Kingdom — British luxury bag maker Mulberry swung to an annual loss as it took a £3 million ($3.77 million) hit from the collapse of department stores group House of Fraser, adding to general weakness in its home market.

The company, whose bags sell for around £1,000, reported a loss before tax of £5 million for the year ended March, compared with a pretax profit of £6.9 million a year earlier.

Mulberry said it had faced bad debt and fixed asset write-off of £2.1 million and fixed asset impairment costs of £800,000 from the House of Fraser collapse.

Mulberry operated concessions in House of Fraser, which was bought from administrators by Mike Ashley's Sports Direct .

Mulberry said although it entered into an agreement with Sports Direct on House of Fraser, the business continued to trade below previous levels.

House of Fraser was an important partner for Mulberry, with its stores containing most of the luxury group's concessions outside London. House of Fraser stores accounted for 40 percent of Mulberry's UK outlets.

Mulberry also said the ongoing delay in agreeing the nature of Britain's potential exit from the European Union continued to create uncertainty that could impact the performance of the business.

The company's total revenue from the UK fell 6 percent to £121.6 million in the year ended March.

By Noor Zainab Hussain; editor: Gopakumar Warrier.