Shares in British luxury brand Mulberry (MUL:AIM) swung 11.2% higher to 283p on Tuesday as investors digested the revelation that Mike Ashley’s Frasers (FRAS) has bagged a 12.5% stake.
The posh handbags maker is a big supplier to Ashley-owned department store House of Fraser and has a number of concessions in its stores.
For Frasers, better known as the owner of Sports Direct, the stake marks the latest move in billionaire Newcastle United owner Ashley’s shift away from the ‘pile them high, sell them cheap’ approach towards posh brands.
PREMIUM BRANDS PUSH
Frasers, whose shares were 2.3% firmer on the Mulberry news at 485.2p, is pursuing a so-called ‘elevation strategy’ of shifting towards higher price-point, higher-margin products.
Mansfield-based Frasers said it looks forward to ‘working more closely with Mulberry for the benefit of shareholders of both companies’.
READ MORE ABOUT MULBERRY HERE
The shares were acquired from Hong Kong-based fund management group Tybourne and based on Monday’s closing Mulberry share price, Frasers splashed out almost £19m to bag the stake.
Ashley is now a significant player at Mulberry, although the Singapore-based Ong family remain the biggest shareholders with a 56% stake.
In November, Thierry Andretta-bossed Mulberry disappointed investors with news of widened first half losses, pinned on further investment to develop the brand in Asia and ‘the effect of a challenging UK market’.
Mulberry was forced to write off around £3m when House of Fraser entered administration in 2018, before its acquisition by Frasers.
DEAL JUNKIE
As Shares explained here, maverick billionaire Ashley has a habit of either acquiring or taking strategic stakes in companies with which he wants closer commercial co-operation, although earlier strategic investments in Debenhams and Goals Soccer Centres both turned sour.
Among Frasers’ current portfolio of interests is a 26.09% stake in fashion brand French Connection (FCCN), although Ashley clearly wasn’t tempted to make an outright bid, because French Connection ditched plans to sell itself last week.
A day earlier, Frasers buoyed investors’ spirits with the news it has settled a tax dispute with the Belgian authorities.
