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(Alliance News) - Mike Ashley's Frasers Group on Thursday reported a drop in profit as lockdown restrictions hit store sales.
Frasers said the Covid-19 crisis had a significant effect on business performance in March and April and has continued to do so due to the shuttering of retail stores.
For the financial year ended April 26, revenue rose 6.9% to GBP3.96 billion from GBP3.70 billion in financial 2019, while pretax profit fell 20% to GBP143.5 million from GBP179.2 million.
The company, which owns the Sports Direct chain, said no dividend was paid during the year and has decided not to declare a final dividend in respect of this financial period to "to preserve financial flexibility".
The retailer said it now intends to invest in excess of GBP100 million in its digital elevation strategy and is confident in achieving between a 10% and 30% improvement in underlying EBITDA during 2021.
"The Covid-19 impact has created uncertainty, and we consider that it will be some time before the country and indeed the world recovers. However, Frasers Group itself has always taken a long-term approach to its strategy and this has helped us, and will continue to help us, through these unprecedented times. We believe our business is strong as is our balance sheet. We will continue with the elevation strategy and the expansion of the new store format supported by our talented and loyal staff and we consider we are well placed for the future," Chair David Daly said.
Ashley added: "The new concept has been well received by landlords and coupled with the changing market conditions is creating further opportunities to grow the pipeline of new elevated stores." He said the strategy, involving creating destination stores, is being applied across the company's Sports Direct, GAME Digital and Evans Cycle brands.
Frasers shares were up 2.0% early Thursday.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: down 1.2% at 6,039.68
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Hang Seng: down 1.9% at 24,712.76
Nikkei 225: closed down 1.0% at 22,880.62
DJIA: closed down 85.19 points, 0.3%, at 27,692.88
S&P 500: closed down 0.4% at 3,374.85
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GBP: down at USD1.3083 (USD1.3190)
EUR: down at USD1.1842 (USD1.1896)
Gold: down at USD1,947.21 per ounce (USD1,958.00)
Oil (Brent): soft at USD44.97 a barrel (USD45.26)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Thursday's Key Economic Events still to come
1100 BST UK CBI industrial trends survey
1100 CEST EU construction output
0830 EDT US initial jobless claims
1030 EDT US EIA weekly natural gas storage report
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Winds of up to 66 miles per hour have been recorded at Pembrey Sands in Wales as Storm Ellen hit Ireland and western parts of Britain, the Met Office said. The forecaster tweeted: "Storm Ellen is currently bringing some unseasonably windy weather across the west with Wales having seen the strongest winds so far." Gusts up to 66mph were also recorded in Ireland at Finner, Met Eireann reported, while the Met Office said Ireland's "exposed southern coasts" had experienced gusts of 89mph at Roches Point. Footage on social media showed strong winds and sparking power lines in Cobh in Ireland, while West Cork TD Holly Cairns shared video of flooding in Skibbereen. Earlier, people on camping holidays were warned trees could easily come down as parts of the UK braced for winds of more than 70mph to hit.
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Producer prices in Germany rose on a monthly basis in July and their annual decline eased, the Federal Statistics Office reported. In July, the index of producer prices for industrial products decreased by 1.7% year-on-year, compared to June's annual decline of 1.8%. On a monthly basis, prices rose by 0.2% from June, compared to a flat reading in June from May.
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The People's Bank of China held its benchmark interest rates steady for the fourth straight month at its August fixing on Thursday, amid signs that the economy is recovering from the shock caused by the Covid-19 crisis. The one-year loan prime rate was left unchanged at 3.85% from the previous monthly fixing, while the five-year remained at 4.65%. The decision was in line with market expectations.
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BROKER RATING CHANGES
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DEUTSCHE BANK CUTS M&G TO 'HOLD' ('BUY') - TARGET 195 (210) PENCE
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BARCLAYS INITIATES CRANSWICK WITH 'UNDERWEIGHT' - TARGET 3,500 PENCE
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JEFFERIES RAISES APAX GLOBAL ALPHA TO 'BUY' ('HOLD')
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COMPANIES - FTSE 100
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Irish building materials firm CRH said it delivered a robust performance in a challenging environment brought about by the coronavirus crisis. For the half-year ended June 30, revenue fell 5.0% to USD12.22 billion from USD12.85 billion the year before, and pretax profit declined 18% to USD518 million from USD717 million. Earnings before interest, tax, depreciation and amortisation was USD1.6 billion, which was 2% ahead of 2019 on a like-for-like basis. CRH said that, in light of the resilient first-half performance and despite the disruption of Covid-19, it has decided to maintain its interim dividend at 22.0 US cents per share. Looking ahead, CRH said the near-term outlook for economic and construction activity across its markets remains uncertain and is dependent on an improving health situation.
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Antofagasta said that due to the outbreak of the coronavirus and its damage to consumer markets, the realised copper price was 13% lower compared with the same period last year and this was felt in lower revenue and profit. For the half-year ended June 30, revenue fell 15% to USD2.14 billion from USD2.53 billion last year and pretax profit by 49% to USD387.5 million from USD763 million. Antofagasta declared an interim dividend of 6.2 cents, down 42% from 10.7 cents paid out last year. It noted that this was in line with its dividend policy of paying out 35% of underlying net earnings. Looking ahead, Antofagasta said its annual copper production guidance is for the lower end of its original 725,000 to 755,000 tonnes range. The miner added that its prospects for the remainder of the year depend largely on the effects of Covid-19 on global consumption.
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First National Bank, a subsidiary of Johannesburg-listed Firstrand, has warned its customers to be vigilant after Experian experienced a breach of data. Experian, a Dublin-based consumer credit reporting company whose clients include banks, reported that a data breach has exposed some personal information of as many as 24 million South Africans and 793,749 business entities to a suspected fraudster. "We are working with the South African Banking Risk Information Centre, the Banking Association of South Africa, and law enforcement and regulatory authorities to mitigate any potential risks on our customers as a result of the incident," FNB said in a statement late on Wednesday.
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COMPANIES - GLOBAL
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Wesfarmers cut its dividend for its recently ended financial year as profit fell on higher costs in spite of growth in revenue. Wesfarmers is an Australian group with interests in retail, chemicals, fertilisers and mining. For the year to the end of June, the group's pretax profit was AUD2.37 billion, about USD1.70 billion, down 15% from AUD2.80 billion the year before. Annual revenue, however, grew by 11% to AUD30.85 billion from AUD27.92 billion the prior year on robust performances from all segments. Among the strongest contributors to revenue was household hardware unit Bunnings, where revenue increased by 14% to AUD15.00 billion, as customer sales grew on the rise in customers working from home. Also benefiting from the work-at-home trend was Officeworks, where revenue increased by 20% to AUD2.79 billion, due to significant demand for technology, home office furniture and education products.
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Thursday's Shareholder Meetings
Tasty
Nuformix
Norish
Vertu Motors
AO World
Centrica - GM re sale of Direct Energy to NRG Energy
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By Tom Waite; thomaslwaite@alliancenews.com
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