M&A activity in the luxury market is buoyant against the backdrop of a continued slowdown in global demand for luxury goods and a further deterioration in the profitability of luxury groups, which is expected to see weaker growth and last longer. United Kingdom luxury leather goods brand Mulberry plans to raise funds by issuing new shares worth 10 million pounds due to a decline in revenue and profit in the previous financial year, which has recently attracted attention in the capital market.
Mulberry has announced its results for the 2024 financial year ended March 30 this year, showing revenue falling 4% year-on-year to £152.8 million, with a gross margin of 70.1% and a pre-tax loss of £34.1 million. During the period, performance declined in the United Kingdom and Asia Pacific, while international sales increased by 8% to £50 million, driven by Sweden, United States, Australia and New Zealand. In the first 25 weeks of fiscal year 2025, which began April 1, the company's operating income fell 18% year-on-year, with global retail revenue down 14% year-on-year.
On 30 September, United Kingdom fashion retail group Frasers, the second largest shareholder, made a cash offer of £1.3 per share to Mulberry, valuing Mulberry at £83 million overall, representing a 30% premium to the brand's capital increase price announced earlier in the day and an 11% premium to its closing price on 27 September. But the offer was subsequently rejected by Mulberry. Mulberry believes that the offer does not recognise the potential value of the brand.
The Frasers Group is Mulberry's second largest shareholder, with a 36.8% stake, while the group's largest shareholder, the Chalice Group, holds a 56.1% stake.
Subsequently, Mulberry announced plans to raise £10 million by issuing an additional 10 million new shares at a price of £1 per share, which will be underwritten by Chalice, with both major shareholder Chalice and second shareholder Frasers Group having pre-emptive rights over the new shares. In addition, Mulberry offers other shareholders the right to participate in a £750,000 retail offer. Mulberry Group's new chief executive officer, Andrea Baldo, succeeds Thierry Andretta earlier this month. Mulberry said the aim of the round was to strengthen the balance sheet and empower Andrea Baldo to execute the strategy. The Board noted that the additional share proceeds will provide all shareholders with an equal opportunity to participate in the company's recovery strategy and indicated that it remains willing to discuss Frasers' participation in the capital increase in proportion to their shareholdings.
On 4 October, Frasers Group again announced that it would increase its stake in Mulberry to a total of 3.96 million shares at £1 per share, which will increase its stake in Mulberry slightly to 36.8% to 37.3% after the share increase transaction, depending on the final offer price of Mulberry's new shares. Under United Kingdom takeover rules, Frasers must make a firm formal takeover offer to Mulberry or cancel the offer by 28 October.
Frasers Group, accustomed to buying large numbers of financially distressed companies in the fashion and retail sectors, took a stake in Mulberry in February 2020 with a focus on building stronger relationships with third-party premium brands. Despite rumors of acquisitions since then, Frasers ruled out a full takeover of the brand at the end of 2020. In addition to Mulberry, Frasers also holds stakes in Hugo Boss, Asos, Boohoo and others, and in recent years has expanded its luxury e-commerce footprint through acquisitions, including United Kingdom e-commerce group THG's luxury website Coggles, and menswear retailer John Anthony, which has an e-commerce channel and offers fashion brands such as Free People and Ganni.
Previously, it was also rumored that Frasers was considering acquiring the e-commerce platform Yoox Net-a-Porter from Richemont, but on October 7, Germany's luxury e-commerce platform Mytheresa announced that it had reached an agreement with Richemont to acquire Yoox Net-A-Porter for 555 million euros.
In addition, Mulberry was officially certified as a B Corp with a score of 87.1, exceeding the passing score required by B Corp and exceeding the industry standard of 80.9. Andrea Baldo, chief executive officer of Mulberry, said Mulberry was one of the first global luxury brands to receive B Corp certification, reflecting the company's DNA and the hard work of the team. Going forward, Mulberry will continue to deliver on its 5C sustainability commitments: Climate, Farming, Craftsmanship, Circularity and Culture, including striving to achieve net zero greenhouse gas emissions (GHG) by 2035, planning to build relationships with regenerative farmers and building an end-to-end United Kingdom supply chain, developing and developing the expertise it has already established in the United Kingdom and connecting to the Regenerative United Kingdom supply chain.
Nandu reporter Wang Xin