Frasers Group reports a decline in consumer confidence due to the Budget.
- The CFO highlights a £50 million tax rise impacting next year’s finances.
- Half-year sales in retail dropped by 8.4% to £2.45 billion.
- Frasers is engaged in a boardroom conflict with Boohoo.
- The group aims for improvements in Boohoo’s business efficiency.
The Frasers Group has issued a cautionary note regarding consumer sentiment, which it describes as ‘spooked’ by recent Budget announcements. This sentiment is expected to have financial implications, with the company anticipating a £50 million increase in its tax bill next year due to changes in employer National Insurance contributions. The group’s Chief Financial Officer, Chris Wootton, commented on the issue, noting that consumer confidence had noticeably weakened both before and after the Budget implementation.
Wootton emphasised the pervasiveness of the issue, attributing it to widespread media negativity. ‘It’s obvious to anyone on the high street that the Budget has really spooked people, and frankly, the 24/7 bad news stories around it have sort of compounded that,’ he stated, highlighting the tangible impact on consumer behaviour and spending patterns.
Financial pressures have led the retail group to revise its profit expectations downward by £25 million for the year. This adjustment follows an 8.4% decline in the retail segment’s half-year sales, which totalled £2.45 billion. These figures reflect the challenging trading conditions that the sector is currently experiencing.
In parallel, Frasers finds itself caught in a contentious boardroom situation with Boohoo, in which it holds a 27% stake. The group is advocating for the inclusion of its founder, Mike Ashley, on Boohoo’s board, presenting a case for necessary strategic adjustments due to perceived shortcomings such as poor transparency and supply chain issues within Boohoo.
Reflecting on the relationship with Boohoo, Wootton expressed a strong desire for the company to fulfil its potential, noting longstanding support and investment from Frasers: ‘We’ve invested a lot of money in that business, we see great partnership potential, we’ve been a supportive shell for a very long time, but we feel there’s some significant areas of improvement that need to be made.’
Frasers Group navigates complex challenges amid economic uncertainties and evolving market dynamics.
