Tuesday 23 February 2021 10:50 am

Mike Ashley's Frasers Group to take £100m hit on lockdown restrictions

Frasers Group, the retail empire owned by Sports Direct founder Mike Ashley, announced this morning that it expects to take a £100m hit due to lockdown restrictions.

The retailer, which also owns House of Fraser and Jack Wills, said the length of the current lockdown, potential changes to consumer behaviour and the risk of future restrictions had contributed to the non-cash impairment.

Read more: Mike Ashley’s Frasers Group withdraws income guidance on Tier 4 news

The government announced yesterday that non-essential retailers in England will not reopen until 12 April at the earliest. 

Frasers said it anticipates making material accounting impairments to freehold properties, other property, plant and equipment and IFRS right of use assets. 

The charge, which is expected to be included in the company’s results for the financial year ending in April, will be in addition to previously announced impairments.

Laura Hoy, equity analyst at Hargreaves Lansdown, said: “While Frasers’ Sports Direct business has weathered the lockdown relatively well, the group’s other high street names like House of Fraser and Jack Wills have been hurt by a lack of demand for occasion wear and work clothing.

“Weddings, dinners out with friends and a return to the office for most workers are still a long way off.

Frasers is concerned about “systemic changes to consumer behaviour,” and rightly so. Social gatherings, and even the typical workday, could look a lot different after more than a year of disruption. Not to mention consumers’ increased preference for e-commerce over high-street shops.

“Frasers isn’t facing a cash crunch for the time-being, but it will struggle to do much more than stay afloat in the near-term. Frasers’ warning is likely a signpost for the sector as a whole: more pain ahead.”

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