COVID-19: Mike Ashley's Frasers Group issues profit warning after Tier 4 announcement
The retailer says the new restrictions mean "virtually all" of its stores in affected areas of the country are having to close.
Monday 21 December 2020 14:21, UK
Mike Ashley's Frasers Group has issued a profits warning after the government announced new coronavirus restrictions closing non-essential retail across large parts of the country.
The company, which includes Sports Direct, House of Fraser, Evans Cycles and Game Digital, said it was unable to commit to latest earnings targets after the Tier 4 announcement at the weekend.
It comes after the British Retail Consortium (BRC) warned of a "severe" impact from the new restrictions, with thousands more jobs across the sector potentially at risk.
In a statement to the stock market on Monday, Frasers said that the announcement on Saturday "with no warning" covering London, the South East and the East of England had led to "virtually all of our stores closing in these areas".
It added that as it was a "peak trading period" and combined with the likelihood of further restrictions over coming months adding to the uncertainty over when stores would open, it was withdrawing profit guidance.
Shares fell 10%.
Frasers had said less than two weeks ago that it was targeting an annual improvement of 20-30% in underlying earnings.
The profit warning is the first guidance to be issue publicly by a major retailer about what impact the Tier 4 restrictions could have.
On Saturday, the BRC criticised the government's "stop-start approach" to restrictions as "deeply unhelpful" and warned that the latest move would leave firms in serious difficulty.
It estimated that retailers faced the prospect of losing £2bn a week in sales.
Retail has been the sector worst affected by the coronavirus jobs crisis, according to a Sky News tracker of publicly-announced cuts by major employers.
Frasers Group has been linked with potential takeovers of two of the highest-profile victims, Arcadia and Debenhams.
Survey figures published on Monday by the Confederation of British Industry (CBI) showed retail sales had picked up in December after November's lockdown across England ended, but that the outlook for January pointed to a sharp fall.