Mulberry shares tumble after Mike Ashley declines to make offer

More than £15m has been wiped off the value of Mulberry after Mike Ashley’s Frasers Group confirmed it would not make a bid for the luxury British brand.

Frasers, which is also considering bids for ailing the department store chain Debenhams and parts of Sir Philip Green’s Arcadia Group, which owns Topshop, said it would not make an offer for Mulberry within six months unless there was a “material change of circumstances”, a rival bid or under agreement with the handbag maker’s board.

The announcement will spur speculation that Ashley intends to focus his energies on Debenhams and Arcadia’s portfolio of retail chains. However, time is running out on Debenhams as Ashley continues to wrangle over the structure of deal. An offer had been expected last weekend, with other potential bidders, including the owner of the US department store Barneys, standing in the wings.

The department store crisis

Pressure from the internet, a declining pound, rising business rates and consumption fatigue – retailers are under fire from all sides. Online shopping now accounts for about a fifth of retail spending and means there are fewer shoppers on the high street. Department stores – hobbled by big premises on long leases, selling brands that are easily found online – have suffered more than most. Among the casualties have been:

Allders of Croydon, one of the biggest department stores in the country, which went into admin­istration in 2012 after 150 years.

• Debenhams, the 240-year-old business was liquidated in December 2020, with the loss of up to 12,000 jobs and closure of 124 stores . 

Jacksons of Reading, a family-run store that opened in 1875, which shut on Christmas Eve 2013 due to poor sales and the need for costly repairs.

Cumming of Leven, a chain with 16 stores that went into administration in 2015. The group operated the Sphere & Turret stores across Fife and other outlets across Scotland.

BHS, which failed in 2016 with the loss of 11,000 jobs and a pension deficit assessed at £571m.

McEwens of Perth, which also collapsed in 2016, with the loss of 110 jobs, after trading problems.

 • Austins in Derry, one of Europe’s oldest department stores, which went into liquidation the same year.

Beales, a national chain founded in 1981, which had to arrange an insolvency procedure to cut its rents and closed several branches in 2017.

Bodgers of Ilford, which shut in 2018 after 125 years. It was the largest independent department store in the area.

Among the businesses still standing but struggling are:

John Lewis, in late 2020 the company announced it is cutting 1,500 head office jobs as part of efforts to make £300m in annual cost savings and return to profitability..

Marks & Spencer, which reported a 62% fall in annual profits to £67m after a £514m bill for restructuring. £300m of that is needed to pay for the first phase of a programme to close 100 stores.

Fenwick, was the UK’s most profitable department store in 2002, but by 2018 was facing a “significant number” of job losses. 

Shares in Mulberry fell nearly 11% in the light of Frasers’ statement on Thursday. In line with many other fashion and luxury goods firms, the Somerset-based company has had a tough 2020 as it was forced to close stores and high-spending tourists stayed away from the UK.

Sales decreased by 29% in the six months to 26 September, when Mulberry closed eight of its 120 stores and made a £2m pretax loss.

Frasers, which was formerly known as Sports Direct, said in November it was considering a takeover of Mulberry after upping its stake in the struggling brand to 37%.

Ashley’s interest in Mulberry first emerged in February when he bought 12.5% of shares in the company. Frasers then acquired 4.3m shares from the Icelandic bank Kaupthing in a deal worth £6.45m.

Under Takeover Panel rules, Frasers was required to make a bid for the entire company after its stake topped 29.9%.

Frasers said last month that the panel had waived that requirement because Mulberry’s biggest shareholder, Challice, which is the investment vehicle for Singapore’s Ong family, had a 56% stake.

However, Frasers said then that it was “reserving its right to make a voluntary offer for the company”. Under the panel’s rules, the deadline for a decision on a “firm intention” to make an offer was 17 December.

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