Mike Ashley Warns of Further Store Closures Amid Calls for Business Rates Reform

Strategic Insights -

Frasers Group's Mike Ashley has sounded the alarm on the potential for further store closures at House of Fraser when the business rates holiday ends in March 2021, highlighting the urgent need for reform of UK business rates to prevent huge job losses across the retail sector. Despite reporting robust full-year results, with group pre-tax profit before exceptional items falling 20% to £143m, Mr Ashley forecast a rise of up to 30% in underlying profits this year. The chief executive also emphasized the importance of reforming business rates to prevent closures, stating that stores are paying four times the rates they should be, which will lead to closures by March.

Key Takeaways:

  • Mike Ashley warned of potential store closures at House of Fraser when the business rates holiday ends in March 2021, with up to 10,000 jobs at risk if reform is not implemented.
  • Frasers Group reported robust full-year results, with group pre-tax profit before exceptional items falling 20% to £143m and sales increasing to £3.95bn.
  • Mr Ashley forecast a rise of up to 30% in underlying profits for the current financial year, driven by acquisitions and a strong sales performance from the premium retail division.
  • The premium retail division, which includes the Flannels luxury chain, made a £4.5m profit compared with a £37m loss last year, with sales increasing to £722m.
  • Mr Ashley reiterated the plan to reduce the number of House of Fraser stores from 48, without providing further details.
  • The group is considering the Debenhams store estate on a case-by-case basis, with Michael Murray, a future son-in-law of Mr Ashley and a key influencer within the business, stating that landlords are "really starting to wake up" to the reality of rents linked to store performance.

Statistics:

  • Group pre-tax profit before exceptional items fell 20% to £143m in the year to April 26.
  • Sales increased to £3.95bn in the year to April 26.
  • The premium retail division made a £4.5m profit compared with a £37m loss last year.
  • Sales in the premium retail division increased to £722m.
  • There are 48 House of Fraser stores, with plans to reduce the number of stores.
  • Debenhams has more than 100 stores, although exact numbers are not provided.

Sources:

  • "Frasers beats expectations as profit falls 20% to £143m" by City A.M.
  • "House of Fraser owner Frasers reveals £143m profits drop as Michael Ashley makes plea to Boris Johnson" by The Scotsman
  • "Frasers Group posts 15% rise in profits despite lockdowns" by Retail Gazette
  • "Frasers Group to close some House of Fraser stores after profit warning" by The Telegraph