Yahoo Finance Frasers shares tank on tier 4 profit warning
Mike Ashley's retail empire Frasers Group has warned that profits will be hammered by the new Tier 4 lockdown across London and swathes of the South East, as retailers prepare for a brutal start to 2021.
The Sports Direct and House of Fraser owner said it is unlikely to hit previous forecasts of a 20pc to 30pc rise in annual profits because dozens of its stores have been forced to shut.
Frasers said: "Given this is a peak trading period, and combined with the high likelihood of further rolling lockdowns nationwide over the following months at least, such is the uncertainty of when stores can and cannot open that the board can no longer commit achieving its publicised guidance... and accordingly is withdrawing its guidance."
Shares fell 10pc in afternoon trading.
Earlier this month, Frasers said pre-tax profits rose by 17.6pc to £106.1m in the six months to October after a successful reopening of stores in England and strong sales.
A host of other firms are also warning of chaos ahead. Many feel the rules are being applied unfairly and are unhappy at being labelled "non-essential" retailers.
Mark Jackson, chief executive of Bensons for Beds, said: “Retailers like us are now in a twilight zone – an open-ended shutdown across a large portion of Britain – that will make the nation’s recovery that much harder in 2021."
The company has closed 52 stores in tier 4 areas and Wales, representing around a quarter of its estate.
Mr Jackson added: "What’s more, there is simply no discernible logic to the decision to treat all non-food retailers in the same way."
Separately, Waterstones chief executive James Daunt told BBC Radio 4 about the pain of having to close shops in the bookstore chain over the lucrative Christmas period.
He said: "It's our harvest time and we’ve got to leave it out in the fields."
Retail footfall was wiped out on what would usually be the busiest weekend for in-store shopping of the year, according to data from retail analytics firm ShopperTrak.
Demand on Super Saturday, the last before Christmas and normally responsible for bumper profits, dropped 40pc compared with the same day last year.
Sunday footfall fell even further as new coronavirus restrictions took hold, with a 58pc slide.
This plunge in visitor numbers will wreck hopes of a busy end to the so-called golden quarter, when shops are normally able to store up excess cash. It will spark fears that many chains are at risk of disaster in the traditionally lean months of January and February.
