Updated
Updated · Retail Gazette · Jul 17
Frasers Says Wage and NI Hikes Added £10 Million in Costs as Profit Misses Forecast
Updated
Updated · Retail Gazette · Jul 17

Frasers Says Wage and NI Hikes Added £10 Million in Costs as Profit Misses Forecast

2 articles · Updated · Retail Gazette · Jul 17

Summary

  • Frasers said minimum wage and employer National Insurance increases added about £10 million to last year's costs, hitting its Premium Lifestyle unit and helping send its shares down almost 6%.
  • That division's operating expenses rose £9.7 million and trading profit fell £9.8 million to £147.6 million, as higher employment costs outweighed better gross profit and other savings.
  • Premium Lifestyle sales dropped 6.9% to £975.7 million, though Frasers said Flannels returned to growth and cited "green shoots" in the luxury market.
  • Across the group, revenue rose 8.7% to £5.33 billion on acquisitions and a 59.2% jump in international sales, but adjusted pre-tax profit slipped 4% to £538 million, below its £550 million-£600 million target.
  • Frasers withheld new-year profit guidance, saying uncertainty over its takeover approaches for Hugo Boss and Accent Group could produce a range of outcomes; it may revisit guidance with half-year results.

Insights

As profits soar but shares slide, what is the real story behind Frasers Group’s financial health?
With takeover bids rejected, is Frasers Group's ambitious 'Elevation Strategy' built on a house of cards?