Struggling luxury handbag maker Mulberry has revealed talks to raise more than £20 million as the group warned over widening annual losses and worsening trading conditions.
The Somerset-based firm said it was launching the cash-call after a “post-2024-25 year-end review by the executive management, and in light of an even more challenging trading environment”.
It added: “The board has concluded that the company will require additional capital to fund its growth strategy and achieve its desired financial targets.”
Shares in the firm plunged 11% in Friday afternoon trading.
Mulberry said it was in discussions with majority shareholder Challice – a group controlled by Singaporean entrepreneur Christina Ong and husband Ong Beng Seng – and major stakeholder Mike Ashley’s Frasers Group over the fundraising.
It comes as Mulberry expects to slump to an underlying pre-tax loss of around £23 million for the year to March 29 against losses of £22.6 million the previous year.
The group is set to report annual revenues tumbling 21% to around £120 million, adding that it does expect “material overall revenue growth” in the new financial year.
Andrea Baldo, chief executive of Mulberry, said the group had taken action to overhaul the business and cut costs as part of plans laid out in January, including shutting some stores.
It already axed around 85 jobs in the run-up to Christmas – around a quarter of its workforce – largely impacting head office workers.
Mr Baldo said: “In the near term, we are firmly in turnaround mode, focused on rebuilding profitability and gross margin, while strategically investing in brand building initiatives.”
He added: “We’ve taken action to reduce costs – restructuring head office and exiting unprofitable stores, delivering a lower run-rate cost base into 2025-26.
“Following our year-end review, the board and I are confident that, with additional funding, we can accelerate momentum and deliver against our targets at pace.”
The firm said shareholder Challice was willing to underwrite the fundraising in full, but Mulberry said it hoped Frasers would also take part.
“Whilst these discussions are ongoing, the board notes that it may not be possible for all parties to agree fully on the structure of the fundraising, in which case the board… will conclude on the most appropriate structure for the company,” Mulberry said.
It expects to complete the fundraising in July, to coincide with the publication of its annual results.
Mr Baldo, who joined the group in September last year from Ganni, is restructuring the business with a focus on the UK market, rather than China, under aims to turn around its fortunes.
Founded in 1971 in Somerset, Mulberry is most famous for its luxury, leather handbags.
But it has seen trading hit hard in recent years, partly as a result of waning appetite for luxury goods among Chinese consumers, previously a key market for the fashion company.
Mr Baldo said, in January, the company will focus less on China and close 12 stores across its Asian estate while aiming to open more shops in UK cities in future.
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