Frasers Group, owned by billionaire Mike Ashley, has acquired a 4.1 per cent stake in Burberry through derivatives, signaling its intent to become a significant player in the UK's luxury retail market. This move aligns with Frasers' broader strategy under chief executive Michael Murray to expand into luxury, complementing its ownership of Flannels and a substantial stake in Mulberry.

Frasers' strategy often involves taking stakes in brands to influence product stocking in its stores, as seen with its significant holding in Hugo Boss. Burberry is currently undergoing a turnaround, reporting a 5 per cent increase in comparable sales for the quarter ending June.

The announcement led to a 5 per cent rise in Burberry's shares and a 2.5 per cent increase for Frasers. Neither company immediately commented on the development.