Mike Ashley’s Frasers circles Burberry in latest luxury swoop
Mike Ashley’s Frasers Group is eyeing up a holding in Burberry as its latest push into luxury fashion.
Frasers has revealed that it holds the rights to a 4.2 per cent stake in the British fashion house, which would make Ashley’s group one of its biggest shareholders.
The position is held through put options, which are financial contracts which give the owner the right to buy shares at a fixed price.
If Frasers exercised these put options, it would trigger a holding in Burberry worth around £171m, according to Burberry’s 1,140p share price at Tuesday’s market close.
Mike Ashley’s group has garnered a reputation for making aggressive plays for control of rival retailers by taking large stakes and pushing for board positions.
Though the FTSE-250-listed company started out in affordable sportswear with Sports Direct, it has been pushing into luxury fashion in recent years, aiming to build on Flannels, the designer brand it owns.
Richard Hunter, head of markets at Interactive Investor, told CityAM that Frasers’s push for a stake in Burberry would help the group “sharpen its image”.
“From an investment perspective, the entry into Burberry comes at a time which could be an inflection point for the company,” he said.
Burberry’s shares have shed about 40 per cent of their value in recent years, as the firm seeks to rebuild after a short-lived push into ultra-high fashion.
Burberry amid drastic turnaround
The turnaround of the British fashion house, led by chief executive Joshua Schulman, is beginning to pay off. The firm posted a five per cent jump in revenue earlier this month, helped by a resurgence in China and the US.
Schulman has imposed swingeing cuts in recent years, saving £100m, and has overseen a pivot towards “timeless British luxury” in its fashion output.
Last month, Frasers launched an unsolicited £1.7bn bid for Hugo Boss, which the German fashion house branded “inadequate”.
Frasers has been ramping up pressure on Hugo Boss to accept the takeover, upping its stake in the brand and reportedly pushing for its chief executive, Michael Murray, to be installed as its boss.
In 2024, Ashley’s group abandoned efforts to gain control of luxury bagmaker Mulberry, after it rejected bids of £83m and £111m.
Frasers Group did not respond to a request for comment.