The crisis at Mulberry and the tycoons tussling over its future

When Mike Ashley stepped down from the board of his retail empire Frasers Group, it always seemed unlikely that the man who had spent the best part of 40 years tormenting his high street rivals would quietly slip away into retirement. And so it proved.
On November 12, 2022, a few weeks after Ashley’s departure, Frasers chairman David Daly, sent a letter to Chris Roberts, his counterpart at Mulberry, the luxury handbag maker it part-owned, requesting Ashley be appointed to its board of directors.
Roberts, who has served on Mulberry’s board for 22 years, rejected the request a month later. While Mulberry acknowledged it needed to appoint a new director, it argued that Ashley was not ­sufficiently independent.
Relations between the two companies have only deteriorated since and, in recent days, they hit a new low.
After the stock market closed on September 27, Mulberry — whose signature Bayswater bags sell for £1,395 — snuck out a statement containing all manner of horrors. Alongside heavily delayed results, which revealed sales had dropped by 18 per cent over the past six months, Mulberry unveiled a £10 million emergency capital raise and warned investors there was a material uncertainty over its ability to continue as a going concern.
Frasers, which owns a 37.3 per cent stake in Mulberry, was furious at being given just ten minutes’ warning and being frozen out of Mulberry’s capital raise. Twenty-four hours later, Frasers tabled an £83 million bid for the company to avoid “another Debenhams situation” where a “perfectly viable business is run into administration”.
Mulberry swiftly rejected the bid and said its majority shareholder, Challice, the investment vehicle controlled by the billionaire Ong family, had no interest in supporting the potential takeover. Instead, the Ongs are backing a turnaround spearheaded by Andrea Baldo, the former boss of the Danish fashion label Ganni, who joined as chief executive in the summer.
In a bizarre twist, Ong Beng Seng, one half of the Singaporean power couple, was charged in the island state on Friday in relation to a political corruption scandal.
Meanwhile, Mulberry remains in a precarious position amid a brutal slowdown in the luxury market. And in Mike Ashley, they have irked a shareholder who has shown immense capacity for disruption.
Mulberry was the brainchild of the founder Roger Saul, who started out producing belts and choker necklaces from his kitchen table in 1971. The company name was inspired by the trees that Saul saw on his way to school.
The heyday for the brand, which floated on the London stock market in 1996, was in the Noughties under the star designer Emma Hill. The popular Alexa satchel, named after “It girl” Alexa Chung, propelled Mulberry’s stock market value to almost £1.5 billion in 2012.
Mulberry never got near that frothy peak again. Hill left in a messy departure in 2013 and Thierry Andretta, who arrived with a CV boasting stints at the likes of LVMH and Gucci, took over as chief executive in 2015. Andretta’s effort to push the brand upmarket floundered. Strategic mistakes were compounded by the broader luxury slowdown after the pandemic and the unexpected removal of VAT free shopping for tourists.
Despite its struggles, the brand remains an important constituent of Britain’s high-end fashion scene. Mulberry claims to be the UK’s largest manufacturer of luxury leather goods, which are handmade by 600 skilled workers in two factories in the rolling hills of Somerset.
Frasers, now run by Ashley’s son-in-law Michael Murray, arrived in 2020 with the opportunistic purchase of a 12.5 per cent stake. Ashley, who had built his fortune on cheap sports gear and oversized mugs, was intent on pushing his retail group upmarket and wanted to use his shareholding as leverage to persuade Mulberry to supply more of its handbags to two of his chains: House of Fraser and Flannels.
Andretta resisted Ashley’s overtures. In his desire to cement Mulberry as a luxury brand, he sought to control as much of his product distribution as possible. That meant selling through hand-picked department store concessions, rather than the wholesale model preferred by Frasers.
“All the luxury brands were on fire during Covid but Mulberry didn’t capitalise on that boom because they didn’t have the distribution to do it,” a source said. “Mulberry is run for the majority shareholder; what they say is what Mulberry does”.
Relations between the companies soured last year. In January 2023, Daly wrote once more to Roberts to express his disappointment at his refusal to appoint Ashley as a director, citing his track record of creating shareholder value in the retail industry, and to express concern at Mulberry’s poor performance. Daly requested documents relating to commercial agreements between Mulberry and the Ong family, which controls a 56 per cent stake, as well as a copy of Mulberry’s latest set of management accounts and further details of its turnaround plan. A peacekeeping meeting was held between ­executives from the companies in April last year, but they did not reconcile their differences.
Corporate governance standards at Mulberry, which is listed on London’s more loosely regulated Alternative Investment Market, appear to fall a long way short of the standards expected of a public company.
While Mulberry’s board opposed Ashley’s appointment, it seems to be able to make room for others who are, arguably, even less independent. Roberts, who has served on the board since 2002, manages the UK arm of the Como Group, an international hotel, restaurant and fashion group controlled by the Ongs. Then there is Steven Grapstein, a board member since 2003, who runs Como’s US business; and finally Melissa Ong, daughter of Christina and Ong Beng Seng.
While the grave situation at Mulberry would normally be an embarrassing headache for the Ongs, it paled into relative insignificance last week. On Friday, Ong Beng Seng, 78, was charged with abetting the crimes of a disgraced politician, Subramaniam Iswaran, who was recently sentenced to a year in prison for accepting freebies while in office.
During Iswaran’s trial, prosecutors claimed he had received gifts from Ong worth more than $300,000. Iswaran’s lawyers argued they were gifts from a friend. Ong, who has not entered a plea, is seeking legal advice.
Frasers took up its option to invest £4 million in Mulberry shares last week and avoid its stake being diluted, but there is no guarantee that Mulberry has raised enough funds to see it through a tough patch. Last year, Mulberry reported a pre-tax loss of £34.1 million on £152.8 million of sales. In March, the brand was sitting on net debts of £16.3 million.
Baldo is busy drafting a turnaround plan that is expected to refocus Mulberry on the UK and dial down its luxury aspirations. Frasers is said to be waiting to review the strategy. For now, Ashley appears snookered. Yet history shows that when he is faced with losing big sums on a bad investment, the Sports Direct tycoon can be creative in his efforts to make life difficult for those in control.
When Debenhams was lurching towards administration, Ashley, who owned a 30 per cent stake, orchestrated a vote to kick its chief executive and chairman off the board and ordered his lawyers to bombard the remaining directors with demands. Those efforts failed. With Mulberry, Ashley will do everything in his power to avoid a repeat.