Mike Ashley's Frasers empire warns over profits due to new lockdown

Mike Ashley's Frasers retail empire has issued a profit warning, saying publicised guidance of a 20 per cent to 30 per cent boost in profits this year is unlikely to be achieved.

The retail tycoon's empire includes Sports Direct, House of Fraser, Evans Cycles and Game Digital. Picture: Carl Court/Getty Images.

The retailer, which includes high-street names such as Sports Direct, House of Fraser (the department store chain with Scottish roots), Evans Cycles and Game Digital, had only made the commitment earlier this month.

But 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.

The group now says publicised guidance of a 20 per cent to 30 per cent boost in profits this year is unlikely to be achieved. Picture: Jeff J Mitchell/Getty Images.

"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 [it] achieving its publicised guidance of a 20 per cent to 30 per cent improvement in underlying [pre-tax profits before one-off costs] during FY21 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.Bosses said they had seen a "successful reopening” of 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 stated that it would not launch a bid for Somerset-based handbag maker and luxury fashion brand Mulberry, after building up a 36.8 per cent stake in the business.

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