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UK retailer Frasers profit jumps on strong reopening after lockdown

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By Reuters
UK retailer Frasers profit jumps on strong reopening after lockdown
UK retailer Frasers profit jumps on strong reopening after lockdown   -   Copyright  Thomson Reuters 2021

By James Davey

LONDON -British sportswear and fashion group Frasers reported a 61.7% rise in first-half core earnings, driven by a strong performance from its shops as they reopened after COVID lockdowns, plus the opening of new Flannels stores and online growth.

Shares in the group, formerly called Sports Direct and controlled by founder Mike Ashley, were up 0.6% at 0916 GMT on Thursday, extending 2021 gains to 58%.

Frasers is pursuing an “elevation” strategy to take its business upmarket. Other brands it owns include House of Fraser, Jack Wills and Sofa.com.

It said it was cautious on the outlook, given macroeconomic headwinds on the horizon in the form of cost increases, supply chain issues and potential squeezes on consumer spending power.

There is also still the risk that measures to curb COVID-19 could adversely affect the outlook with restrictions returning, including lockdowns in Europe.

“Notwithstanding the above risks … we do believe the group can achieve an adjusted profit before tax of between 300 million pounds to 350 million pounds for the period ended 24 April 2022 on the proviso there are no substantial lockdowns imposed in the UK, particularly over the important Christmas period,” it said.

Analysts at Liberum raised their full-year profit forecast by 7% to the mid-point of the forecast range and their price target to 900 pence from 850 pence.

On Wednesday, Britain’s Prime Minister Boris Johnson imposed tougher COVID-19 restrictions in England, ordering people to work from home, wear masks in public places and use vaccine passes to slow the spread of the Omicron variant.

Ashley is set to step down as chief executive in May and be succeeded by Michael Murray, his daughter’s partner and Frasers’ current “head of elevation”.

Ashley, who owns about 66% of the group’s equity, will remain on the board as an executive director.

In September, Frasers’ investors backed an executive share scheme which could earn Murray 100 million pounds.

The group reported adjusted pretax profit of 186.8 million pounds ($246.6 million) for the six months to Oct. 24, up from 115.5 million a year earlier.

Group revenue rose 23.6% to 2.34 billion pounds.

($1 = 0.7574 pounds)