Mike Ashley’s retail group Frasers (FRAS) has pulled the annual guidance given less than a fortnight ago after being forced to shutter its stores in parts of England under the latest government Covid-19 restrictions, news that sent the shares 8.6% lower to 436.6p on Monday.
From Sunday, in a bid to suppress a new fast-spreading strain of the virus, the government closed non-essential retail in London, the South East and the East of England with no warning. This has led to ‘virtually all of our stores closing in these areas’, bemoaned Sports Direct-to-House of Fraser owner Frasers.
GUIDANCE WITHDRAWN
With coronavirus curbs tightened in the crucial few days of Christmas shopping left and given ‘the high likelihood of further rolling lockdowns nationwide over the following months at least’, Frasers said it can ‘no longer commit’ to recent guidance of a 20%-to-30% improvement in underlying earnings before interest, tax, depreciation and amortisation (EBITDA) for the current financial year and withdrew guidance accordingly.
Earlier this month (10 Dec), Ashley’s resilient retail empire posted a rise in first half profit and raised the bottom end of its guidance for full year 2021 following strong online sales and the reopening of stores from the beginning of December.
August’s guidance for underlying EBITDA growth of 10%-to-30% was upgraded to guidance for a 20% to 30% improvement.
For the 26 weeks to 25 October, underlying pre-tax profit rose 43.7% to £146.3 million as revenue slipped 7.4% to £1.89 billion at the UK’s biggest sporting goods purveyor by sales. The top line decline was caused by temporary store closures due to Covid-19.
EVANS ELUDES ASHLEY
In talks over a potential rescue of Debenhams’ UK operations, Frasers has also expressed interested in participating in the sale process of Philip Green’s Arcadia, which lurched into administration last month, though it reportedly faces competition from Lord Wolfson-led Next (NXT) and US group Authentic Brands.
Arcadia’s brands include Topshop, Topman, Dorothy Perkins, Burton, Wallis and Miss Selfridge, though the first brand to be sold by administrator Deloitte is Evans.
In a deal that ends the prospect of anyone buying Arcadia in its entirety, Deloitte has offloaded the Evans brand, customer base and inventory to Australian-listed plus-size women’s clothing retailer City Chic Collective for £23 million; however the transaction excludes the Evans store network, which will continue to trade for the time being.
‘The process to secure new owners for the other Arcadia Group brands is ongoing,’ said Deloitte, adding there have been ‘significant expressions of interest for all brands. The Joint Administrators expect to provide a further update in the new year.’
