Sports Direct owner Frasers Group issued a profit warning today as it said the Budget has hit consumer confidence and will add £50 million to its costs.
The high street giant, founded by retail tycoon Mike Ashley, which also owns the FLANNELS, Jack Wills, House of Fraser, and Gieves and Hawkes brands said that “both ahead of and after the recent Budget, consumer confidence has weakened and recent trading conditions have been tougher.”
As a result pre-tax profits for the current financial year ending next April “is now expected to be in the range £550 million to £600 million.” Previous guidance was a range of £575 million to £625 million pounds after £545 million pounds last year.
The shares fell more than 10% to 663.5p on the news.
It comes after industry data earlier this week showed lacklustre UK retail sales for November, with trade body the British Retail Consortium saying low consumer confidence and rising energy bills had dented spending.
Frasers, which today dropped out of the FTSE 100, also expects costs to increase by £50 million in the next financial year as a result of higher employer National Insurance bills and other measures announced in the Budget. The company added it is “working hard to mitigate these in order to maintain our profitable growth ambitions.”
In the six months to 27 October revenues fell 8.3% to £2.54 billion while adjusted pre-tax profits fell 1.5% to £299.2 million. The core ULK Sports operations, which accounts for 54% of revenue, reported a 7.6% fall in revenue to £1.37 billion while operating profits dropped from £226.8 million to £189.9 million.
Chief executive Michael Murray said: “The first half of this year has been another period of progress for the group, delivering on our objectives as the Elevation Strategy continues to take the business to the next level.
“Sports Direct UK delivered further sales growth, and our property and financial services divisions are seeing encouraging progress...We are set to deliver another year of profitable growth but, given recent weaker consumer confidence leading up to and following the Budget, FY25 APBT is now expected to be in the range of £550 million to £600 million.”
In recent months Frasers has launched an abortive takeover bid for luxury brand Mulberry and got embroiled in a public row with online retailer Boohoo.
