Mike Ashley’s Sports Direct and Flannels group makes £83m bid for struggling luxury brand Mulberry

Mike Ashley’s Frasers Group has made an £83m takeover bid for struggling handbag maker Mulberry.

The Somerset fashion brand has been hit hard by a downturn in the luxury sector and warned late last week that it would need to raise cash amid concerns about its long-term future.

Frasers Group, which owns Sports Direct and Flannels, already owns a 37% stake in the company.

The retail giant said it put forward an approach worth 130p per share, valuing the stake in the company it does not own at £52.4m.

It comes after Mulberry said it needed to raise over £10m on Friday after slumping to a significant loss for the past year.

The luxury fashion firm slumped to a £34.1m pre-tax loss for the year to March 31, compared with a £13.2m profit a year earlier.

It has warned that sales have dropped more sharply over the spring and summer, with group revenues plunging 18% over the past 25 weeks as wealthy shoppers rein in spending.

Within the accounts, Mulberry cautioned that the downturn has resulted in a “material uncertainty, which may cast significant doubt on the group and parent company’s ability to continue as a going concern” if its struggles continue.

Frasers said it was pushing to take control of Mulberry partly due to these concerns about the long-term viability of the business.

The company said: “Frasers are exceptionally concerned by the audit opinion in the latest annual report released on Friday September 27, 2024, which notes a “material uncertainty related to going concern”.

“As a 37% shareholder, Frasers will not accept another Debenhams situation where a perfectly viable business is run into administration.”

Mulberry was founded in 1971 in Somerset by Roger Saul and has celebrity fans including the Princess of Wales and Kate Moss.