Frasers Group blames Brexit & Covid-19 on profit dip as it mulls shop closures

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Mike Ashley Frasers Group trading update covid-19 brexit
Frasers Group revealed a profit decline in its delayed preliminary results
// Frasers Group profits decline as it blames Brexit and Covid-19
// Mike Ashley’s retail empire warned of more store closures as it shifts it focus towards online

Frasers Group has warned of further store closures after revealed a drop in profits in its delayed full year results, which it blamed on Brexit and the coronavirus pandemic.

For the year ending April 26, Frasers Group recorded a pre-tax profit decline of 19.9 per cent to £143.5 million, while underlying pre-tax profits dropped 18.1 per cent to £117.4 million.

Group revenues across Mike Ashley’s retail empire increased 6.9 per cent to £3.95 billion, but decreased by 12.6 per cent when excluding newly-acquired businesses, such as Jack Wills and Evans Cycles.


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Reported EBITDA skyrocketed 98.7 per cent to £551 million, but this was due to changes in reporting after the implementation of IFRS16.

Underlying EBITDA for the group was up five per cent to £302.1 million.

Meanwhile, in the UK, Frasers Group’s retail revenues saw a mere 0.7 per cent rise during the period, driven predominantly by Frasers’ acquisition of Game.

Sales across its premium lifestyle category increased 34.9 per cent, which was boosted by Jack Wills and Sofa.com.

The international arm of the business saw sales drop by 19.3 per cent to £174.2 million, while its wholesale and licensing arm posted a two per cent dip in revenues to £160.2 million.

“The political uncertainty around Brexit had been with us for far too long and, just as we were feeling more confident of getting some clarity and stability, the Covid-19 crisis arrived, which will continue to have an impact on the economy and our business beyond FY20,” Frasers Group chairman David Daly said.

Frasers Group still plans to invest “in excess of £100 million” its digital elevation strategy in the coming year with a “particular focus on Flannels”.

It also warned of more store closures as it continues to shift its focus towards its online business.

“With digital transformation now at the forefront, the successful reopening of our stores after the Covid-19 lockdown and continuing strong web performance, Frasers is confident in achieving 10 per cent to 30 per cent growth in EBITDA for the full year 2021,” Daly said.

Daly said elevating the group and its diverse portfolio of brands “would continue to be the biggest strategic priority” for Frasers Group in the coming financial year.

He also criticised Debenhams’ current management team because it was “scandalous that this business has now been in administration twice” within a space of a year.

Ashley had made a few attempts to takeover Debenhams last year in the lead-up to its first administration, but was rejected each time.

Frasers Group’s full year trading update also comes days after Daly “accidentally” breached City rules by purchasing company stock in the run-up to the results.

Daly bought 3912 shares worth more than £11,000 on Monday, but sold them within 15 minutes and donated the profits on the sale to charity.

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4 COMMENTS

  1. OR… House of Fraser could be going down because Mike Ashely has trashed the brand. I visited the store formerly known as Kendals in Manchester a couple of weeks ago and it was like a bargain basement / remainders store, but without the volume of shoppers. And full of the sort of quality of stuff you’d find in a Sports Direct store. Speaking to the assistants they said the clientele had changed a lot. It is a tragedy for what once was “The Harrods of the North”.

    • I agree, the Westfield store in London is a disgrace, although previous management had ran it into the ground leaving it with no stock for AW2018 I expected a transitional lull, but there was no pick up. In almost two years of ownership there has been no investment and shop space given to Sports Direct brands or closed off.

    • Arguably, HoF trashed itself prior to Sports Direct take over as they couldn’t run a viable business. However the stores now appear much worse since the takeover, with ‘brands’ that should not be anywhere near it.

      Ashley bought a pig in a poke with HoF and has become even worse. It is clearly losing money and has little affinity with the public as they seem confused as to what it is. I cannot see it ever making a profit, therefore begs the question why does it still need to exist?

  2. Completely agree with the above comments about HoF. Some stores look like Grace Brothers from Are You Being Served – the same as some Debenhams stores and they are in desperate need of a refurb which will never pay for itself – or shutting down for good

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