Mulberry plans £20m fundraising, expects FY losses to widen

(Sharecast News) - Luxury handbag maker Mulberry tumbled on Friday as it announced plans to raise £20m of additional capital to help fund its growth strategy and meet its medium-term revenue, profitability and cash generation targets, and said it expects a widening of its full-year losses. Following a post FY25 year-end review by the executive management, "and in light of an even more challenging trading environment seen at a macro level", the board concluded that it will require additional capital to fund its growth strategy and achieve its desired financial targets.

The firm's medium-term goals are annual revenues of £200m and an earnings before interest and tax margin of 15%.

The company said majority shareholder Challice has confirmed it would be willing to underwrite the fundraising in full if required. However, Mulberry believes its prospects are stronger if its other major shareholder Frasers Group also participates.

Mulberry said its board has been engaging with Challice and Mike Ashley's Frasers to reach agreement on the final structure and terms of the fundraising.

"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, or an independent committee thereof, will conclude on the most appropriate structure for the company," it said.

News of the planned fundraising came as the company said it expects FY25 revenues to be around £120m, down from £152.9m in 2024 and an underlying pre-tax loss of about £23m, compared to £22.6m a year earlier.

Mulberry said trading in the 11 weeks since the FY25 year-end has been in line with the board's expectations and that it does not expect "material" overall revenue growth in the current financial year.

Chief executive Andrea Baldo said: "When I outlined our strategy in January, I set out a clear two-phased approach. In the near term, we are firmly in turnaround mode - focused on rebuilding profitability and gross margin, while strategically investing in brand building initiatives.

"Since then, we've taken decisive steps to improve performance and lay the groundwork for sustainable growth. These include securing UK distribution deals with Flannels and John Lewis, expanding international reach through new doors in Nordstrom (US) and David Jones (AU), and enhancing our product offer by growing our icon families in full price stores and optimising our inventory levels for outlet stores.

"We've refreshed the executive team, aligned talent to our revised strategy, and launched a new brand campaign to drive customer engagement. Operationally, we've enhanced customer service through a new incentive model linked to in-store conversion, improved relationships with our supply chain partners and built a robust wholesale pipeline for FY26. Alongside this, we've taken action to reduce costs - restructuring head office and exiting unprofitable stores - delivering a lower run-rate cost base into FY26.

"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."

At 1550 BST, the shares were down 15% at 95.50p.