Frasers Group, headed by CEO Mike Ashley, is intensifying its foray into the luxury sector by increasing its stake in British leather goods company, Mulberry. Since February of this year, the group has been steadily acquiring shares in Mulberry and now holds nearly 37% of the company. Usually, owning over 30% would trigger a mandatory takeover offer, but Frasers Group has been granted an exception by the Panel on Takeovers and Mergers due to Challice Ltd’s majority holding of about 56% of the issued share capital.

Although not obligated to make a mandatory cash offer, Frasers Group has expressed its consideration of a voluntary offer for Mulberry. The current deadline for this offer is December 17, but there is a possibility of an extension with approval from the Takeover Panel.

This recent move by Frasers Group highlights its ambition to enhance its position in the market. While the company already possesses Flannels, a designer fashion chain, and House of Fraser department stores, its flagship business, Sports Direct, has been regarded as more downmarket compared to its competitor, JD Sports. In response, the group has embarked on a strategy to revamp its Sports Direct stores and rebrand itself as the “Selfridges of sport.” This elevated strategy extends beyond its sports operations, as Frasers Group has been expanding its Flannels chain and intends to launch a department store chain named Frasers with an upscale profile.

Mulberry’s esteemed reputation for luxury accessories within UK department stores presents an appealing opportunity for Frasers Group. Despite encountering profitability challenges in recent years, such as losses in the previous financial year and discontinuation of its ready-to-wear line, Mulberry remains a valuable asset. The company has also projected losses for the current financial year, which is not surprising considering the ongoing impact of the pandemic.

Useful links:
1. Frasers Group Official Website
2. Mulberry Official Website