Profits at Frasers Group (FRAS.L), the company behind Sports Direct, fell 20% last year even as sales rose.
Billionaire Mike Ashley’s Frasers Group said on Thursday that pre-tax profit in the 12 months to 26 April 2020 fell 19.9% to £143.5m ($187.6m). Sales rose 6.9% to £3.9bn, driven by the acquisition of GAME. Excluding acquisitions and currency changes, revenue fell 12.6%.
Chairman David Daly said it had been “the most challenging year in the history of the Company.”
“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,” he wrote in the accounts.
The long awaited results, which were delayed by auditing issues, come after Frasers Group withdrew its financial guidance in March, blaming the COVID-19 pandemic. Frasers Group also suspended its share buyback plans at the time.
Shares in Frasers Group have fallen over 15% so far this year, reflecting a broader slump in consumer-focused stocks since the COVID-19 pandemic struck.
Frasers Group’s main business is Sports Direct, but the company also owns the likes of House of Fraser, GAME, Flannels, and USC, as well as stakes in brands like luxury handbag maker Mulberry.
Sales at its “premium lifestyle” shops jumped 35%, driven by the acquisition of Jack Wills and Sofa.com.
The company said on Thursday it would invest £100m in its “digital elevation strategy”, hoping to grow underlying earnings by between 10% and 30% in 2021.
Earlier this week Frasers Group revealed its chairman had bought shares in the company “in error” despite the company being in a closed period prior to the publication of annual results.
The embarrassing incident extends the company’s reputation for poor corporate governance. Ashely, who founded and majority owns the company, is known for making risky corporate bets and has publicly described himself as a “power drinker”. The company has faced a parliamentary inquiry over its treatment of workers and Ashley has weathered repeated investor rebellions over his management style.