Mike Ashley’s Frasers Group forced to trim back profit forecasts as retailers face much leaner Christmas than had been hoped
- The firm said guidance of a 20 to 30 per cent boost in profits now unlikely
- Frasers Group includes Sports Direct, House of Fraser, Evans Cycles and Game
Mike Ashley’s Frasers retail empire has issued a profit warning as retailers face a much leaner Christmas and longer spells of restrictions than earlier hoped.
The firm said guidance of a 20 to 30 per cent boost in profits this year is now unlikely to materialize.
Frasers Group, which includes Sports Direct, House of Fraser, Evans Cycles and Game Digital, had only made the forecast earlier in December, but things have taken a sudden turn for the worse.
Mike Ashley’s Frasers retail empire ha scut back its profit forecasts
The new Tier 4 rules introduced over the weekend have hit the business, with many stores forced to close to customers – although staff in stores are still expected to go in to fulfil click-and-collect orders.
In an update to the stock market, the company said: ‘From Sunday 20 December 2020, the Government closed non-essential retail in London, the South East and East of England with no warning. This has led to virtually all of our stores closing in these areas.’
‘Given this is a peak trading period, and combined with the high likelihood of further rolling lockdowns nationwide over the following months at least, such is the uncertainty of when stores can and cannot open that the board of Frasers Group plc can no longer commit to Frasers Group achieving its publicised guidance of a 20 per cent to 30 per cent improvement in underlying earnings during 2021 and, accordingly, is withdrawing its guidance.’
Earlier this month, the company revealed that pre-tax profits rose by 17.6 per cent to £106.1 million at Frasers Group, in the half-year to the end of October.
Frasers Group has warned that further department store closures could be on the cards
Bosses said they had seen a ‘successful reopening of our stores in England’ following the national lockdown, adding ‘we can confidently raise the bottom end of our full-year guidance’.
The retailer said it had benefited from the business rates holiday, although revenues fell 7.6 per cent to £1.89 billion due to the six weeks of store closures in the first lockdown. Excluding acquisitions, revenues fell 12.6 per cent.
On Thursday, Frasers said it would not buy a stake in Somerset-based handbag maker and luxury fashion brand Mulberry, after building up a 36.8 per cent stake in the business.