Frasers lifts FY guidance as online sales boost interims

Mike Ashley’s Frasers Group raised full year profit guidance as it reported higher profits at the half-year driven by strong sales online and at stores as they reopened after the Covid-19 lockdown.

The company on Thursday said underlying core earnings would be 20% - 30% higher. Interim pre-tax profits rose 17.6% to £106.1m on a 7.4% fall in revenue to £1.9bn.

Frasers, which owns chains including Sports Direct and Evans Cycles, reported underlying earnings before interest, tax, depreciation and amortisation of £226.3m for the six months to October 25, compared with £181.2m a year earlier.

Sports Retail revenue decreased by 9.8%, to £1.07bn, largely caused by temporary store closures due to Covid-19 lockdowns, offset by growth in online business.

Premium Lifestyle revenue grew 4.8% to £320.4m, largely due to new Flannels stores, increased web sales, and a full period of the prior year acquisitions of Jack Wills and Sofa.com, offset by the temporary store closures.

"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of the UK High Street, which was already suffering before Covid-19, won't survive unless the government addresses the out of date business rates regime which is due to return come April 2021," the company said.

The government's business rates holiday, implemented at the start of the pandemic to help firms ride out the crisis, is due to end on March 31.

There was no update on Frasers' potential rescue of department store chain Debenhams, which called in the liquidators on Monday after talks with JD Sports collapsed.

Despite the strong first-half performance, Frasers non-executive chair David Daly sounded a note of caution, warning that the second wave of Covid-19 and tighter restrictions were “materially impacting the business”.