Frasers Group, the owner of brands including House of Fraser, Sports Direct and Flannels, says the UK lockdown and subsequent closure of non-essential retail stores could impact the company by more than GBP100m (US$140.9m).
In a statement this morning (23 February), the Mike Ashley-owned group said further to yesterday’s announcement by the UK government that non-essential stores in England will potentially reopen on 12 April, Frasers Group currently anticipates making material accounting impairments to freehold properties, other property, plant and equipment, and IFRS 16 Right of Use Assets.
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“Given the length of this current lockdown, potential systemic changes to consumer behaviour, and the risk of further restrictions in future, we believe this non-cash impairment could be in excess of GBP100m. Any such impairment would be in addition to impairments included in the half-year results announced on 10 December 2020 and is expected to be included, subject to audit, with the company’s results for the financial year ending April 2021,” the group said.
Frasers reported a 17.6% jump in pre-tax profits for the first half of fiscal 2021, despite a fall in sales linked to lockdown store closures.
For the six months to 26 October, reported profit before tax rose to GBP106.1m from GBP90.2m last year. Underlying profit before tax was up 43.7% to GBP146.3m, while reported EBITDA was 23.1% higher at GBP357.1m.
Group revenue, meanwhile, fell 7.4% to GBP1.9bn with declines in its UK sports division, European retail, rest of world retail, and wholesale and licensing division.
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By GlobalDataThe group had forecast a 20-30% improvement in underlying EBITDA during FY21 but withdrew that guidance on 21 December after non-essential retail in London, the South East, and East of England was closed under government restrictions.
Earlier this month, Frasers sold its 24.93% stake in fashion brand French Connection.
