Frasers Group, formerly known as Sports Direct, has significantly increased its ownership stake in luxury leather goods maker Mulberry. The company now holds 29.65% of Mulberry, up from its previous stake of 12.54%. This latest acquisition brings Frasers’ ownership just under the 30% threshold that would trigger a requirement to make a full offer for the business under stock exchange rules.

While it is unclear whether Frasers intends to make a full offer for Mulberry, its past actions with Debenhams suggest otherwise. The company’s increased stake in Mulberry is part of its strategy to strengthen relationships with premium third-party brands and enhance its retail offerings. The exact amount paid for the increased stake has not been disclosed; however, it would likely be lower than the initial purchase made in February when Mulberry’s shares were trading at a higher price before the stock market crash.

Despite experiencing challenges, Mulberry remains a significant player in the department store leather goods market. Although the company reported a decline in revenue for the year ending March 2020, it has stated that trading since then has been better than anticipated. Frasers’ increased stake in Mulberry showcases its continued shift towards the higher end of the market.

Frasers Group has a history of acquiring brands, such as Jack Wills and House of Fraser, and holds a stake in Hugo Boss. The company is also reportedly interested in purchasing Jaeger. In recent years, Frasers has prioritized its elevation strategy, moving away from the low-price reputation of its Sports Direct chain. This strategy involves opening more upscale Flannels stores and working on the development of a new high-end department store chain called Frasers.

While Frasers has experienced success with brand acquisitions, its track record with minority stake purchases has been less favorable. The company suffered losses when its nearly 30% stake in Debenhams became worthless after the company entered administration. However, this setback has not deterred Frasers from its commitment to expanding its presence in the luxury retail sector.

Useful links:
1. Mulberry
2. Business of Fashion