Yahoo Finance Sports Direct-owner Frasers doubles down on stores even as pandemic drives sales online
Frasers Group (FRAS.L), the retail company owned by billionaire Mike Ashley, is committed to physical stores despite the decline of the high street.
Frasers, which owns Sports Direct and House of Fraser among others, said on Thursday it would continue to invest in its shops even as the COVID-19 pandemic pushes more and more shopping online.
“Our store programme continues to go from strength to strength with the recent opening of our new 25,000 square foot flagship multi fascia offering in Cascades Shopping Centre, Portsmouth,” the company said in a statement.
“We are also undertaking significant investment on our flagship Sports Direct store on Oxford Street in London, confident in its future trading prospects.”
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Frasers said it was making “significant investment” in digital alongside its physical stores but this online push would “elevate our retail proposition” rather than replace it. The company said this emphasis on in-person retail had “strengthened our relationship with some of our important suppliers, such as Nike (NKE) for Sports Direct, Burberry (BRBY.L) for Flannels, and Hugo Boss (BOSS.DE) for House of Fraser.”
The push comes despite more and more sales moving online. COVID-19 has pushed up the proportion of UK shopping done online from around a fifth to a third. The shift has created problems for retailers with large store footprints — the likes of Arcadia and Debenhams have both collapsed in recent weeks.
“Fortunately the Frasers Group is a strong business built on solid foundations,” Frasers chairman David Daly said in a statement. “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of the UK High Street, which was already suffering before COVID-19, won't survive unless the government addresses the out of date business rates regime which is due to return come April 2021.”
READ MORE: TopShop-owner Arcadia collapses with 13,000 jobs on the line
Daly’s call to reform business rates — a tax on business premises — came in Frasers Group’s interim results, which were published alongside the strategy statement. The results showed profits up but sales down over the last six month.
Frasers Group said that profit before tax rose by 17.6% to £106.1m ($141.3m) in the six months to the end of October, even as revenue shrunk 7.4% to £1.9bn. Sales were hit by lockdowns at the start of the period and ongoing restrictions throughout. However, online performed strongly.
The group said sales had rebounded strongly since the end of the second lockdown in England on 2 December. Frasers upgraded its earning growth forecast as a result. The company now expects underlying EBITDA (earnings before interest, tax, depreciation, and amortisation) to rise by between 20% and 30% during the full year.
Shares in Frasers Group leapt as much as 12.5% in London.
Earlier this week Frasers Group confirmed in was in talks to buy some or all of bust Debenhams to save the business from oblivion. No update was given on the status of those talks.
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