Mike Ashley's Frasers to spend £100m on digital arm despite profits fall

Mike Ashley’s retail group Frasers today said it intends to spend £100 million investing in its online business after digital revenues soared in lockdown.

The group said it will spend the money on “an enhanced customer experience” and with a particular focus on the upmarket Flannels fashion brand, after digital performed “extremely well” in lockdown.

The retail group continued to trade online as its stores were forced to close in March due to the virus-induced national lockdown.

In its annual results, delayed a week from last Thursday, pre-tax profits fell to £143.5 million in the year to April 26, down from £179.2 million.

Revenues rose 6.9% to £3.96 billion from £3.7 billion at the group, which includes the House of Fraser, Evans Cycles, Game and Jack Wills brands. However, excluding acquisitions revenues fell 12.6%.

Margins also fell, down to 42% from 42.8% after the acquisition of Game, which operates in the competitive video games retail market. The board did not declare a dividend.

The group saw adjusted EBITDA rise 5% on last year to £302 million and said it can achieve a 10% to 30% improvement in the coming year, sending shares up 11% to 341p.

Chairman David Daly said: “The uncertainty over Brexit, followed by the Covid-19 crisis has undoubtedly resulted in unprecedented times for businesses and the consequences will be felt for the foreseeable future.

“We will commit ourselves to working collaboratively with all our key stakeholders to protect the future of our business and the health and livelihood of our 30,000 staff who work within the Frasers Group.”

The group, which is 64% owned by Newcastle United owner Ashley, also vented its anger at the situation at Debenhams. Sports Direct last year saw its holding in the department store retailer wiped out by the first of two administrations and has called for an investigation into those events.

Today Daly said of the probe: “Our offers of help were repeatedly disregarded and it is scandalous that this business has now been in administration twice.

“To date and to our knowledge, there seems to be a lack of political or regulatory interest in investigating the impact on shareholders in the initial administration, and now in the second administration we expect that further stakeholders will suffer.”

He added: “It has been widely reported that we are seeking the appointment of a provisional liquidator to Debenhams, or a winding up order, so that an independent investigation can be carried out into the actions and parties involved in the company's administration.

“We are opposed, however, by certain entities which placed Debenhams plc into administration. If their opposition is successful, Debenhams plc will be dissolved, meaning that no investigation can be carried out.”