Frasers Group’s financial results for the 12 months to 26 April showed pre-tax profits across brands decline by almost 20% to £143.5m.
The results, which were delayed for the second consecutive year, also showed sales across brands increase by 6.9% from £3.7bn to £3.96bn when compared with the year before. This increase comes after a number of acquisitions which included Jack Wills, Game, and Sofa.com.
Frasers Group’s premium lifestyle division saw sales rise 18.6% as six new Flannels stores opened across the UK while five House of Frasers stores closed.
Frasers Group’s owner Mike Ashley said that his objective for the upcoming financial period is to invest £100m into its online business, focusing on Flannels. This is due to online sales seeing growth during the Covid-19 coronavirus lockdown.
He also aims to move the group’s leasehold estate towards turnover-based rents.
Fraser Group’s response to the financial year
In a statement, the firm said: “the political uncertainty around Brexit had been with us for far too long and, just as we were feeling more confident of getting some clarity and stability, the Covid-19 crisis arrived which will continue to have an impact on the economy and our business.
“The Covid-19 situation had a significant impact on our business performance across the group in March and April – and continued to do so in the post year-end period – due to the shutdown of retail stores.”
Speaking on the future for the company, the group said: “Thankfully, as of the date of release of these financial statements, there is a semblance of normality returning with virtually all retail stores now fully open across the group, albeit subject to strict social distancing measures.
“However the future, at least in the near term, is unclear as we and indeed the world come to terms with living under the threat of Covid-19 and what its short, medium, and long term effects may be.
“There is currently a risk of a second wave which could lead to reinstatement of lockdown restrictions and there will be economic consequences which we do not yet fully understand.”
House of Fraser closures could be in the future
Frasers Group have said that this past year had been the “most challenging” in the history of the company. It also noted that there was now “a semblance of normality returning”, though landlords have been threatened with store closures should they not move to rents based on sales figures.
In a statement, the group said: “There are anticipated to be further closures over the coming period, the number of which will depend on the outcome of lease negotiation.”
Ashley said: “Long-term leases will be signed with collaborative landlords and those willing to co-invest in the elevated store model. However, it is possible further store closures will occur over the coming year where such terms cannot be agreed.”
House of Fraser, in particular, is in danger of store closures as its chairman David Daly said that the department store “remains a challenge”.