Mike Ashley has bought a 12.5% stake in the luxury British handbag company Mulberry as he seeks to push his retail empire upmarket.
Ashley’s Fraser Group announced on Monday that it had bought the shareholding as a part of a “key strategic priority” to reposition his fashion group towards “premium third-party brands”. The sale price was not disclosed but based on Friday’s share price, when the transaction took place, it would have been worth just under £19m.
The Sports Direct tycoon has been expanding his retail empire with a string of acquisitions of struggling retailers, including the department store chain House of Fraser for £90m, Jack Wills, Evans Cycles, Sofa.com and Game Digital.
The expansion led Ashley to rename the company, ditching the Sports Direct International name for Frasers Group in December. The name change followed criticism from politicians and investors over working conditions at Sports Direct and the standard of corporate governance at the wider group.
Mulberry is by far the most upmarket investment for Ashley’s stable, which also includes Flannels, Lillywhites, Donnay, Slazenger, Kangol, Karrimor, Lonsdale and a 26% stake in French Connection.
Mulberry bags can easily exceed £1,000. A small Iris tartan check handbag described as being designed to “shine as an everyday favourite” costs £1,350.
In a statement, Frasers, which is 65%-owned by Ashley, said: “Mulberry is a global luxury brand with a rich British heritage.
“A key strategic priority for Frasers Group is the elevation of our retail proposition and building stronger relationships with premium third-party brands. Frasers Group looks forward to working more closely with Mulberry for the benefit of shareholders of both companies.”
Along with the group name change, Ashley is preparing to turn up to seven of House of Fraser’s 50-plus stores into a new luxury mini-chain to be called Frasers. The Frasers sites will stock more designer labels while House of Fraser will cater to a more mass-market audience.
Nick Bubb, an independent retail analyst, said: “[It] may explain why he didn’t go for French Connection but Ted Baker would be a more logical way of extending his premium fashion business. Mulberry is a real luxury operation, although there is some synergy with House of Fraser.”
Ashley has appointed his future son-in-law Michael Murray as head of elevation in a bid to secure a more high-end reputation. Murray is not on the company’s board, or even an employee, but is employed as a consultant, paid 25% of any value he creates from property deals – a formula that has resulted in Sports Direct giving Murray more than £10.5m in the past two years.
Frasers and Mulberry declined to state the price of the stake sale. On Friday the Hong-Kong investment group Tybourne sold its entire 11% stake in the business, which is likely to have been bought by Frasers as part of the deal.
The Singaporean billionaire Christina Ong is the biggest shareholder in Mulberry, with a 56% stake via her Challice investment firm. Ong is known as the “Queen of Bond Street” because of the number of stores she owns on London’s upmarket shopping street.
In November, Mulberry reported a £10m pre-tax loss for the six months to the end of September.
Ashley is reportedly in talks to sell Newcastle United Football Club to Saudi Arabia’s sovereign wealth fund for £340m.
