// 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.