Photo: burberryplc.com
Although Burberry’s shares have not yet come under Frasers’ control, investors have already reacted to the news. The company’s shares rose by about 5% during trading in London, according to Bloomberg. However, this was not enough to offset the decline since the start of the year: Burberry shares are still trading about 10% lower than in January.
For Mike Ashley, such investments have long been part of his strategy. Frasers is gradually acquiring stakes in well-known European fashion companies, expanding its influence in the industry. Today, the group is already the second-largest shareholder in Mulberry and the largest investor in Hugo Boss. Previously, it even attempted to gain control of the German brand.
Experts believe that the goal of such investments is not merely to profit from rising stock prices. By acquiring stakes in companies whose products are sold in Frasers stores, the retailer strengthens its relationships with key suppliers and gains more opportunities to influence business development. Burberry products already occupy a prominent place in the product lineup of Flannels, a chain of luxury department stores owned by the group.
However, Mike Ashley’s strategy has not always paid off. One of the most unsuccessful investments was the British department store chain Debenhams, on which Frasers lost at least $200 million, according to Bloomberg estimates.
Interest in Burberry emerged at a time when the company is trying to regain growth after several weak quarters. Therefore, the market viewed Frasers’ investment in the brand as a sign that major investors are once again beginning to believe in the prospects of one of Britain’s most famous fashion houses.
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