Ashley’s Frasers Group aim for 2020, was to move into upmarket fashion, and away from its traditional sportswear stores.

Ashley’s Frasers Group

Ashley’s Frasers Group

By Staff Writerécoute moi

British retail tycoon Mike Ashley has acquired a 12.5% stake in struggling luxury fashion brand Mulberry. Sports Direct International will rebrand as Frasers Group, subject to a shareholders’ vote has bought a 12.5% stake.  Owner Mike Ashley has also expressed a desire to elevate the group’s image, planning to rebrand some House of Fraser stores as luxury lifestyle concept shops. Mike Ashley, the British billionaire, is the top most investor in Mulberry because of sales made by Frazer. British luxury bag maker Mulberry said on Monday it would take a 3 million pound ($3.8 million) hit from the collapse of House of Fraser, adding to the toll it faces from tough conditions in its home market.

Ashley’s Frasers Group

Mulberry operates 21 concessions in House of Fraser, the department stores group that was bought from administrators by Mike Ashley’s Sports Direct this month. The company, whose bags sell for around 1,000 pounds, said House of Fraser costs, reflecting debtor balances, fixed assets and restructuring, would be an exceptional item in its results for the six-months to the end of September. It said the upheaval at House of Fraser was compounded by deteriorating trading conditions in Britain.

“Since the group reported in June 2018, the UK market has continued to remain challenging and sales in House of Fraser stores have been particularly affected,” it said.  “If these sales trends in the UK continue into the key trading period of the second half of the financial year, the group’s profit for the whole year will be materially reduced.”

Mulberry said trading in the rest of the world was broadly in line with its expectations and its cash position was strong, supporting its ambition to become a global luxury brand.

Ashley’s Frasers Group

Sports Direct bought House of Fraser for 90 million pounds after an earlier rescue plan, involving shutting 31 stores, was thwarted when Chinese group C.banner pulled out of a plan to invest.

Media reports have said Sports Direct only plans to pay suppliers and concession operators for goods sold since it took over the group.

House of Fraser is an important partner for Mulberry, with its department stores containing most of the luxury group’s concessions outside London.

Analysts, however, said the cost of the group’s collapse was not the only worry for investors.

Mulberry reported pre-tax profit of 6.9 million pounds for the year to end-March, down 5 percent on the previous year, on revenue of 169.7 million pounds.

Ashley’s Frasers Group

The choice of the new brand reflects what Sports Direct calls an “elevation strategy”, which covers the entire group. The rebranding follows on from an earlier decision to bring Frasers luxury lifestyle stores to the high street within the next financial year. “The decision to rebrand the group as Frasers reflects the fact that this new, elevated concept will house the core areas of focus for the wider business – iconic brands, beauty, sports and luxury fashion”, as Reuters quotes the chain.

Sports Direct was founded in 1982 by Ashley as one shop in Maidenhead, in the South of England. It now employs 29,400 people in 20 countries and in six business sectors.

In the next financial year 2020-21, the company has the intentions to bring Frazers “luxury lifestyle stores” to British shopping streets.