Mike Ashley’s Frasers Group has warned that it could face a hit of more than £200 million from the pandemic, twice the sum it estimated two months ago, on the back of fears of a third wave.
The retail group, which includes Sports Direct, House of Fraser, Jack Wills, Evans and Flannels, said that it expected an even bigger writedown of its stores and other property assets than the £100 million it forecast in February.
Frasers Group said that its view had been prompted by the government’s warning about a potential third wave. This week Boris Johnson said that normality remained “some way off”.
Frasers said: “Further restrictions are in our view almost certain. “We also note the Covid-19 affected experiences, estimates and judgments from other leading retailers.”
Chris Wootton, chief financial officer, said that Next had recently published its assumptions that its shop sales would be down by 20 per cent for the rest of the year.
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Wootton said that the additional writedown had not been the result of pressure from RSM, its new auditor, and that the decision had not been reviewed by RSM although the group had informed the firm before telling investors.
Frasers, which yesterday opened a 34,000 sq ft department store in Wolverhampton, is understood to be concerned about the prospect of future lockdowns that would hammer shop revenues.
In December Frasers recorded a 17.6 per cent rise in pre-tax profits to £106.1 million as online sales and business rates relief on its House of Fraser shops helped to cushion the group from shop closures during the pandemic.
It then scrapped profit guidance for the year when the government announced a lockdown in the southeast of England that derailed peak Christmas trading.
