Frasers Group warns of COVID ‘shadow of uncertainty’ and cost of living squeeze

Business

The owner of House of Fraser and Sports Direct has warned of a “shadow of uncertainty” cast by latest COVID-19 fears as well as the potential impact of a cost of living squeeze on consumers.

Frasers Group reported a sharp rise in half-year sales and profits compared to a period last year affected by lockdown restrictions.

But it said it remained cautious looking ahead – citing supply chain issues as well as a squeeze on consumers and the return of lockdowns in Europe.

House of Fraser
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The group includes department store chain House of Fraser

The group, controlled by former Newcastle United owner Mike Ashley, reported a 24% increase in revenue to £2.34bn for the six months to 24 October as profits rose 75% to £186m.

But chairman David Daly said: “Unfortunately we still have the shadow of uncertainty cast by the ongoing COVID-19 pandemic, with restrictions including lockdowns returning to parts of Europe and with the emergence of new variants.

“There are also supply chain risks which to date we have proven resilient to but which must be factored into our future forecasting given these could continue for some time.

“On top of this there are the well-publicised macroeconomic factors contributing to a likely cost of living squeeze which could impinge on consumers spending plans heading into the new year.”

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Frasers said its “UK sports retail” arm which includes Sports Direct as well as Evans Cycles and GAME UK brands, saw sales climb 28% to £1.37bn for the half year.

In “premium lifestyle”, which includes House of Fraser, Flannels and Jack Wills, revenues climbed 34% to £428m, largely due to new Flannels stores, continued growth in online, and growth in House of Fraser, the group said.

File photo dated 10/7/2017 of Sports Direct tycoon Mike Ashley
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Sports Direct tycoon Mike Ashley sold Newcastle United to Saudi investors

Frasers booked a £135m accounting charge to take into account restrictions returning to parts of Europe, as soaring shipping and supply chain costs and inflation pressure on consumer spending.

But it is targeting an increase in full-year profits to between £300 million and £350 million, assuming no further UK lockdowns.

Shares climbed 1.7% in early trading.

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