Frasers Group has accused the UK’s Labour government of “skulduggery” for raising taxes on businesses, as the retailer cut its profit guidance, sending shares down 14 per cent.
The owner of Sports Direct, which operates stores across the Republic, and House of Fraser, trimmed its guidance for adjusted pretax profit to as much as £600 million (€725 million) from £625 million.
Frasers, majority owned by tycoon Mike Ashley, cited a decline at Hugo Boss, in which it owns a large stake, and weak consumer confidence, while reporting a 1.5 per cent fall in adjusted pretax profit in the half year to October 27th to £299 million.
Its share price fall on Thursday morning was the steepest since March 2020 when Covid lockdowns were implemented. They plunged 12 per cent after the sportswear group joined rival JD Sports Fashion in warning that recent trading conditions have been tougher.
Frasers had already lost its place in the FTSE 100 according to a statement on Wednesday night.
“The skulduggery around the budget is mind blowing,” chief executive Michael Murray said in a phone interview. “It’s not only just increased cost, but it’s also destroyed consumer confidence.”
The UK’s chancellor of the exchequer Rachel Reeves increased taxes by more than £40 billion in her budget toward the end of October, with most of the revenue coming from a higher payroll levy called national insurance.
Frasers holds a sizeable stake in Hugo Boss. Shares in the German high-end brand have fallen to their lowest level since 2021 amid weakness in critical markets such as China and the UK.
Frasers, whose brands also include Flannels and Jack Wills, made £299.2 million in its first half to October 27th, down 1.5 per cent year-on-year. Revenue fell 8.3 per cent to £2.54 billion. Shares have fallen 29 per cent so far this year.
The retailer, which has over 1,500 UK stores, expects to incur at least £50 million of incremental costs from 2025/26 as a result of the budget.
“We are working hard to mitigate these in order to maintain our profitable growth ambitions,” it said.
The group is pursuing what it calls an “elevation strategy” focused on strengthened relationships with brands such as Nike and Adidas, development of its own brand business and investment in flagship stores, automation and online.
In October, Frasers tried and failed to buy Mulberry and is currently in a row with Boohoo over board representation. – Bloomberg, Reuters
