Mike Ashley’s Frasers Group has increased its stake in Mulberry to 29 per cent, just below the threshold at which it would be obliged to make a takeover offer for the luxury goods retailer.
The majority of the shares were acquired from Icelandic bank Kaupthing, which retains a 7.2 per cent stake, regulatory filings showed.
Frasers acquired an initial 12.5 per cent interest in Mulberry earlier this year, marking a return to a policy of buying non-controlling stakes in brands with whom it wants deeper partnerships.
Since then it has also taken a stake in German luxury goods group Hugo Boss, although most of that is held via option agreements rather than directly through shares.
“We are proud to show our commitment to this growing relationship between Mulberry and the Frasers Group by increasing our investment in this iconic British brand,” said Michael Murray, Frasers’ head of elevation.
He added that Mulberry had been a presence in its House of Fraser stores for some time and that the brand would be launched in Flannels, the group’s luxury chain, in the coming weeks.
Mulberry, which is run by French-Italian chief executive Thierry Andretta, was hit by House of Fraser’s insolvency in 2018 which compounded tough trading conditions on the high street.
It has also been severely affected by the Covid-19 pandemic. At the start of the year trading was hit by the absence of affluent tourists from Asia in European cities, which led to a £14m loss for the 12 months to March.
The company’s outlets and concessions in department stores were forced to close during the UK’s 12-week lockdown earlier in the year and footfall in city centres has remained weak since. Mulberry stores in England are now once again closed as a result of the four-week lockdown that began on Thursday.
The company has voiced concern about the withdrawal of VAT refunds for non-EU tourists, which it fears will encourage wealthy visitors from the Middle East, Russia and Asia to shop in Milan or Paris instead of London.
Mulberry’s Aim-traded shares, which closed at £1.40, are almost back at their March lows. Frasers’ increased stake means almost nine-tenths of Mulberry stock is in the hands of Mr Ashley and Challice, the vehicle for Singapore’s Ong family, which owns 56 per cent.
Typically, Mr Ashley keeps stakes in investee companies below 30 per cent and does not request board representation. This allows Frasers to state that it has no control or influence and account for them as investments.