Mike Ashley’s Frasers Group has launched a takeover bid for luxury handbag maker Mulberry, expressing deep concerns about the fashion brand’s future.
Mulberry, which has seen a sharp decline in sales due to a downturn in the luxury sector, recently announced plans to raise nearly £11 million to support its finances.
Frasers Group, which already owns a 37% stake in Mulberry and operates retailers such as Sports Direct and Flannels, has valued the company at £83 million in its takeover offer.
The group expressed worry over Mulberry’s financial health, citing an auditor’s report that highlighted “material uncertainty” about the brand’s future as a going concern.
Frasers said it was only informed of Mulberry’s plans to raise additional funds just before the public announcement, leading to frustration over the lack of engagement with its large shareholder.
The company added that it wanted to avoid a repeat of the Debenhams collapse in 2019, where Frasers had also held a stake in a business that eventually went into administration.
Mulberry has struggled in recent months, reporting a £34.1 million pre-tax loss for the year ending in March, compared to a £13.2 million profit the previous year.
Group sales dropped by 4% during the period, and since then, revenues have fallen further by 18%.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, noted Ashley’s growing frustration with Mulberry’s board, adding that investors are also losing patience as the company’s shares have plummeted 52% over the past year.
Frasers Group has been taking steps to move upmarket, including increasing its stake in Hugo Boss, and views its involvement with Mulberry as a crucial part of that strategy.
