retail

Frasers increases Hugo Boss stake to €900mn


Frasers Group has raised its stake in Hugo Boss to about €900mn in the latest move by the UK retailer to boost its exposure to the German fashion brand.

The UK-listed retail company, known for its Sports Direct, Flannels and House of Fraser brands, said on Wednesday that it had increased its direct holdings of Frankfurt-listed Hugo Boss shares to 4.9 per cent, up from a previous level of 2.1 per cent.

It has also increased its indirect exposure by granting put options, which give the holder the right but not the obligation to sell Boss shares to Frasers at a set price in the future, from 23 per cent to about 26 per cent.

The latest investment raises Frasers’ maximum exposure to approximately €900mn, net of the premium income received from selling the put options.

It began acquiring shares and derivatives in Hugo Boss in June 2020, since when the price has risen about 78 per cent as the company — whose current chief executive is its third in six years — restructures its operations.

Boss is a significant supplier to Flannels, the luxury goods chain that is one of Frasers’ better-performing sub-brands and a priority for new chief executive Michael Murray.

But the practice of acquiring “strategic stakes” in partners and suppliers was established by Mike Ashley, Murray’s father-in-law and the founder of the company, who has in the past owned chunks of defunct department store chain Debenhams, US sportswear group Finish Line and sportswear giant Adidas.

Ashley tended not to allow his stakes to exceed the 29 per cent level that would require him to make a takeover offer to all shareholders in UK investee companies, and rarely demanded board-level representation.

That looks likely to continue; Frasers said the latest increase in its stake reflected its “belief in the Hugo Boss brand, strategy and management team” and that it intended to be a “supportive” shareholder.

The company is also a major shareholder in Mulberry, the luxury handbag maker, though it has ruled out making a takeover bid.

Frasers is due to report headline results in late July, though they will not include numbers from Studio Retail, which was acquired out of administration in February. More recently, it acquired online fashion retailer Missguided, also from administrators.



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