Sports Direct owner warns it could take Covid hit in excess of £200m

Mike Ashley, chief executive of Sports Direct owner Frasers Group

(Reuters)

The company that owns Sports Direct, Frasers Group, has warned it could take a hit in excess of £200m due to the coronavirus lockdown restrictions – double its previous estimate in February.

The Mike Ashley-controlled retail giant said it believes further restrictions are “almost certain” because of government warnings about a potential “third wave” of Covid-19 in the UK.

Despite getting ready to reopen stores across England on Monday, Frasers said in a gloomy assessment of its finances that it was anticipating write-downs to freehold properties.

“Frasers Group is continuing to assess the Covid-19 potential impact on asset values,” the firm said in an announcement to the London Stock Exchange.

“In our ongoing assessment we note the continuing government and government adviser pronouncements regarding ‘third waves’ and normality being ‘some way off’, meaning further restrictions are in our view almost certain.”

The company added: “We also note the Covid-19-affected experiences, estimates and judgments from other leading retailers.”

Frasers is planning to reopen vast swathes of its estate from Monday, as non-essential retailers in England are allowed to welcome back customers following the winter shutdown.

The group includes House of Fraser, Game Digital, Jack Wills, and Evans Cycles, which remained open as an essential retailer during lockdown, as well as Sports Direct.

Last year Sports Direct employees shared their outrage at initially being told they would have to work, despite stores being closed during the first Covid lockdown.

The company blamed confusing guidelines over whether sports stores could be classed as essential retail, as it agreed to close its stores in March 2020.

Mr Ashley’s firm has also been eyeing up potential takeover opportunities throughout the Covid crisis, showing interest in the collapsed Debenhams and Peacocks brands.

However, administrators for Debenhams and Peacocks have found that Frasers’ offers have tended to be far too low to accept.

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