Dive Brief:
- Mulberry Group announced a 20 million pound fundraising round, or about $27 million, which it plans to use to accelerate its growth strategy, according to a Thursday press release.
- The funding is through major shareholders Challice Limited and Frasers Group, in the form of 20 million convertible loan notes. The deal is subject to a shareholder vote at the company’s general meeting at the end of the month.
- Mulberry is also undertaking another offer of more than 1.26 million ordinary shares to allow minority shareholders in the U.K. to participate in the company’s fundraising activities, per the release. Adding this option protects it from the “potential dilutive impact” of Challice and Frasers, the company said.
Dive Insight:
At the beginning of this year, Mulberry announced a new plan to restore profitability dubbed “Back to the Mulberry Spirit,” which called for simplification, brand realignment and enhanced customer connection.
However, due to what the company called “challenging trading conditions” at the macro level, Mulberry Group’s board concluded it needed more funding to reach its desired financial targets.
Mulberry announced the fundraising at the same time it reported its annual results for the fiscal year that ended March 29, in which the group’s revenue fell 21% to 120.4 million pounds. The company attributed this decline to challenging macroeconomic conditions.
Securing the funding from the company’s two largest shareholders would be the most effective way to minimize cost and increase certainty, Mulberry said. The funding is structured to ensure that proceeds from the deal will be “put to work as soon as possible.”
Additionally, the proceeds are expected to make Mulberry cash flow positive, per the release.
Mulberry intends to rebuild its core product families, boost sell-through, and invest in new revenue streams, including outlets and its wholesale channel, per the release. The company will also use the money to market in its primary markets of the U.K. and U.S., as well as upgrade its e-commerce tools.
For the quarter that ended June 1, group revenue declined by 18% in the retail, digital and wholesale channels, which the company said was in line with its expectations. For the rest of the year, the company plans to focus on optimizing its portfolio. It added that its wholesale segment is positioned for growth in the fiscal year.
Last year, the Mulberry Group, along with Challice, rejected Frasers’ acquisition attempt. The Mulberry board said at the time that Frasers’ offer was untenable and that Mulberry would focus instead on driving commercial performance.
