Frasers Group investors brace for impact of Covid-19 on trading

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Frasers Group investors brace for impact of Covid-19 on trading
Mike Ashley’s Frasers Group empire consists of Sports Direct, House of Fraser, Flannels, Jack Wills Evans Cycles, USC, Game and Sofa.com.
// Frasers Group expected to unveil trading update next week on Thursday
// Investors keen to see how it has performed amidst the coronavirus pandemic, as rivals undergo job cuts and store closures

Investors in Frasers Group are hoping the company will have been boosted by strong online and reopening sales when it reveals the impact of the Covid-19 pandemic for the first time.

Mike Ashley’s retail empire – which owns Sports Direct, House of Fraser, Flannels, Jack Wills Evans Cycles, USC, Game and Sofa.com – has remained quiet throughout the crisis so far, as high street rivals have announced job cuts and store closures.

Shareholders will therefore be keen to understand the ramifications of the retail group closing its stores for around three months when it announces its full-year figures on Thursday next week.


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The retailer shut its stores in March, after facing criticism for initially claiming Sports Direct was an essential retailer for keeping the nation fit in a bid to keep stores open.

Ashley later apologised for “ill-judged and poorly timed” emails to the UK Government and poor communication with employees.

Frasers Group has now reopened stores, but sales are expected to be significantly lower amid social distancing restrictions and lower footfall.

“We’ve said before that coronavirus will seriously interrupt revenues and profits, we just don’t know by how much,” Hargreaves Lansdown equity analyst Sophie Lund-Yates said.

“It’s reasonable to expect that online sales have done well – scores of us were scrabbling for sports equipment and workout gear in the early days of lockdown.

“The question will be to what degree this has plugged the overall sales gap.”

Frasers Group’s full-year results will cover the year to April, so may only represent some of the disruption caused by the pandemic.

However, investors will also be keen to hear how the company is progressing with its long-term transformation plan.

Frasers Group recently acquired a 6.1 per cent stake in Hugo Boss as it looks to invest in higher-end brands as part of its bid to become more upmarket.

It also has a significant stake of around 27 per cent in French Connection.

Investors will also be keen to find out if the company plans to shake up its store portfolio, as rivals agree rent deals with landlords and shut sites.

Last month, the retail group warned it would have to review the future of some of its stores in light of the government’s decision to delay the revaluation of business rates.

The company said it looked on “with anguish and bewilderment” after it was announced that the next valuation of the property tax will take place in 2023.

Ashley has been a harsh critic of the government’s current business rates model, but its outlook is set to be significantly boosted by Chancellor Rishi Sunak’s decision to wipe out the tax for retailers for the current financial year.

The business rates holiday is expected to save the retail group and its subsidiaries around £91.2 million for the 2020/21 financial year, according to real estate adviser Altus Group.

with PA Wires

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