Luxury fashion firm Mulberry (MUL.L) has raised £20 million from its largest shareholders as it revealed a plunge in sales over the past year.

Bosses at the handbag maker said it has made “significant progress” in its turnaround efforts, after being hit hard by a slowdown in luxury spending in recent years.

Last month, the company said it planned to launch a cash-call in order to help stabilise its finances amid a challenging backdrop.

On Thursday, the Somerset-based firm said Singapore-based Challice and Sports Direct-owner Frasers Group (FRAS.L), Mulberry’s two largest shareholders, supported a £20 million fundraise to provide the business with fresh capital.

It will also appoint James France from Frasers’ onto Mulberry’s board of directors.

It came as Mulberry revealed blamed the shrinking luxury market for a 21% slump in revenues to £120.4 million for the year to March 29.

This included a 20% fall in UK retail and digital revenues, after it was impacted by “macro-economic conditions, uncertainty and inflationary pressures which has affected consumer spend and habits”.

Mulberry saw underlying pre-tax losses grow to £23.7 million for the year as a result, compared with a £22.6 million loss a year earlier.

The business is currently undergoing a major turnaround plan under recently appointed boss Andrea Baldo.

The plan includes efforts to simplify its operations, including the closure of 12 loss-making shops in Asia, and a “refresh” of Mulberry’s brand identity.

Sales across the company declined 18% over the nine weeks June 1, matching board expectations.

Mr Baldo said: “We have made significant progress in laying the foundations for Mulberry’s turnaround.

“Since launching our Back to the Mulberry Spirit strategy in January, we have acted at pace to simplify the business, reduce costs, and refocus on our most profitable channels and markets.

“This is an ambitious transformation, underpinned by operational discipline and a commitment to placing creativity at the heart of everything we do.”

Shares in the company were 5% lower on Thursday afternoon.

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