Owner of Sports Direct and House of Fraser sees profits rise as Debenhams talks continue
Pre-tax profit rose by 17.6 per cent to £106.1 million at Frasers Group in the 26 weeks to October 25, despite a 7.4 per cent fall in revenue to just under £1.9 billion.
The group, which is part of Newcastle United owner Mike Ashley’s business empire, said the increase in earnings had been driven by a strong start in its stores since lockdown ended.
It also credited growth in its online business, new stores opened by its Flannels brand, and operating efficiencies.
The latest figures do not take into account the national lockdown that hit England last month and stronger tiered restrictions in parts of Scotland that forced the closure of non-essential retailers.
Chairman David Daly said: “Unfortunately the Covid-19 crisis continues to be a significant issue for all of us and we are currently living through a second wave. This has resulted in more lockdowns and restrictions which are materially impacting the business.
“From November 5 virtually all of our group stores in England were closed until December 2. Our stores in Scotland and Northern Ireland largely remained open, but in Wales were closed from October 23 to November 9.
“Across much of Europe further restrictions have caused stores in a number of countries to close at various times. Against this backdrop, our online offering remains resilient and helps to mitigate to a certain extent the negative effect caused by these bricks and mortar closures.”
He added: “I do not wish to comment on the wider Covid-19 picture but from a general retail perspective it is impossible to ignore the lack of clarity of guidance when it finally arrives.
“Fortunately the Frasers Group is a strong business built on solid foundations. We can weather most of the storms faced this calendar year, however much of the UK high street, which was already suffering before Covid-19, won’t survive unless the government addresses the out of date business rates regime which is due to return come April 2021.”
There was no mention of Debenhams in the statement after Frasers Group confirmed earlier this week that it was in talks with the department store’s administrators in a move that could save some stores and jobs.
Frasers expects earnings before interest, tax, depreciation and amortisation to increase by about 20 per cent to 30 per cent over the financial year, a better range than previously guided.
House of Fraser can trace its roots back to 1849 when the Buchanan Street store in Glasgow opened under the name Arthur and Fraser.
In 2018, Ashley sealed a £95m deal to acquire the historic department store under plans to transform the building into the “Harrods of the North”.
Frasers Group, formerly Sports Direct International, runs 42 sports stores in Scotland.
The interim results also revealed that gross margin for the group increased 20 basis points to 44 per cent.