Mike Ashley’s Frasers becomes latest retailer to warn on profits due to ‘significant disruption’ from coronavirus outbreak
- Frasers no longer expects profits to grow by the 5 to 15% in the year to April
- The retail group also dropped its forward guidance due to the uncertainty
- Last year Frasers made profits of £287.8million
- Coronavirus symptoms: what are they and should you see a doctor?
Mike Ashley’s Frasers Group, formerly known as Sports Direct, has become the latest retailer to warn of the devastating impact of the coronavirus pandemic.
Anticipating ‘significant disruption’ to its business as fewer customers come through its doors, the group issued a profit warning and dropped forward guidance.
It no longer expects profits to grow by the 5 to 15 per cent previously forecast in the financial year to the end of April. And given the uncertain outlook, it also said it cannot issue forecasts for the new financial year.
Profit warning: Mike Ashley’s Frasers Group expects ‘significant disruption’ to business
Frasers shares are up 3.2 per cent at 233p.
It said in a statement: ‘Whilst it is too early to estimate what the full impact from COVID-19 will be on the Company’s performance for the current financial year ending 26 April 2020, and future periods, the Board expects that COVID-19 will cause significant disruption to its business, including reducing customer footfall and therefore expects that Frasers Group will not achieve the range of guidance of 5 to 15% EBITDA growth previously given for the financial year ending 26 April 2020.’
Last year, Frasers made profits of £287.8million.
It follows yesterday’s dire warning by high street bellwether Next, which said retailers were facing an ‘unprecedented’ crisis and warned annual profits could dive to just £55million, compared to £594million in the year to January.
Meanwhile, Marks & Spencer also issued a profit warning today after seeing a substantial fall in sales in its clothing and homes business.
Analysts at Liberum said: ‘Today’s brief update highlights that, until the Covid-19 outbreak, trading had been in line with expectations.
‘However, there is now expected to be a significant impact.
‘We continue to expect Frasers to be a long-term winner and believe that the strategic nous from its M&A strategy and the benefits that should flow are not fully-appreciated. We also note the group’s balance sheet strength and track record of strong cash-generation.’