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Mulberry has rejected a proposed £83 million takeover offer from Mike Ashley’s Frasers Group, a significant minority shareholder that owns around 37 per cent of the British handbag company. The takeover bid follows Mulberry’s announcement on Friday that it needs to issue £10 million worth of new shares to strengthen its balance sheet after suffering a pre-tax loss of £34.1 million over the past year.
The board rejected the proposal because it believes it “does not recognise the company’s substantial future potential value”, according to a statement released this morning. Shares were up 3.4 per cent on Tuesday. Majority shareholder Challice Limited (a Singapore-based investment firm, which owns 56.1 per cent of Mulberry’s issued shares) also confirmed that it has no interest in supporting Frasers Group’s offer. Frasers has been given a deadline of 5pm on 28 October to announce an official offer.
Mulberry, which was founded in 1971, is known for classic leather bags such as the Bayswater and the Alexa, as well as accessories and womenswear. (Prices reach £1,650 for a Bayswater.) The brand has struggled financially over the past few years, particularly after Brexit terminated the UK’s tax-free shopping scheme for tourists. In the year ended 31 March 2024, Mulberry’s revenue dipped 4 per cent to £152.8 million, impacted by the broader luxury slowdown. In the 25 weeks since that period, sales have fallen by 18 per cent year-on-year.
Meanwhile, Frasers Group, which owns retail chains including Flannels, House of Fraser, Sports Direct and Jack Wills, has been on a mission to grow the premium and luxury side of its business. Mulberry has been on its radar for years; Frasers first invested in the brand in 2020, initially acquiring a 12.5 per cent stake, which it has grown over time. Frasers Group also has a stake in Hugo Boss, which was raised to 10 per cent in July.
Analysts say an acquisition would make sense for Frasers Group, which is already a wholesale partner for Mulberry. “Frasers [Group] can, reasonably, see Mulberry fitting into its department store and online proposition that includes a re-engineered Frasers — it has just opened a new store in Sheffield — plus its Flannels estate,” says retail analyst Clive Black, who is director of financial services firm Shore Capital.
Growing Flannels is a particular focus. The luxury multi-brand retailer has been on an aggressive expansion strategy, tapping into younger audiences with a flagship in London that hosts community events (it has over 80 stores across the UK and Ireland in total). In December 2023, Frasers Group acquired luxury retailer Matches for £52 million to strengthen its luxury offering, and said at the time that it was confident it could drive profitable growth for the e-tailer. However, Matches entered administration in March 2024; Frasers said it had become clear that a restructure would require too much investment to be viable. Now, the Matches website redirects visitors to Flannels.
What’s next for Mulberry
Frasers says it is concerned about Mulberry’s future, given the ongoing slump in sales. “As a 37 per cent shareholder, Frasers will not accept another Debenhams situation where a perfectly viable business is run into administration,” the company said on Monday. (Frasers had a stake in Debenhams, which went out of business in 2021.) Frasers declined to comment further to Vogue Business.
“Reading Frasers Group’s strategic thinking is always challenging, but this looks like a fit with their elevation strategy,” says consultant Richard Hyman. “It’s always tempting to see one development leading to many others. Will Frasers look to buy more luxury brands? It reflects the overall pressure that global luxury faces right now.”
In the announcement this morning, the Mulberry board said it has faith in new CEO Andrea Baldo’s turnaround strategy (which has not been revealed publicly yet). Baldo, who joined from Ganni as CEO in July and succeeded Thierry Andretta, has a strong commercial background and is keen to win back Mulberry’s British market share, which was lost under its previous strategy of international expansion.
However, the reality is that Mulberry needs capital. “Frasers could come back with a substantially higher offer than its 130p proposed opening shot, but if Challice does not want to play ball, then Frasers is high and dry,” says Black. “Challice could seek to bid for Frasers’s stake, if it had the [cash], but again, a willing buyer needs a willing seller. Potential stalemate.”
There are possible benefits to a public spat over its ownership, Black adds, but likely only in the short term. “The current shenanigans certainly raise [Mulberry’s] profile, but there is the chance of a long stand-off that will benefit few. Whether or not this higher brand awareness feeds into trading remains to be seen.” He adds that Mulberry “may benefit from single ownership, a new management team and the backing of a strong balance sheet”.
“Mulberry was a vibrant and relevant British brand at some point — with an original position in the accessible luxury market,” says luxury goods analyst Luca Solca. “My impression is that this brand has moved sideways for a long time, since the overambitious attempt to reposition it upmarket, which caused a litany of profit warnings. Whether acquired or not, I believe the Mulberry brand deserves to come back with a more prominent and relevant position, true to its original roots.”
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