Frasers Group unveils £80m share buyback programme
- Frasers Group also conducted three share buyback schemes worth £80m last year
- The Derbyshire-based company is Britain’s largest sporting goods retailer
Shares in Frasers Group rose on Monday after the owner of Sports Direct and House of Fraser said it would take nearly £80 million of its own shares.
Mike Ashley’s retail empire intends to buy back up to 10 million shares, equivalent to 2 per cent of the company, for 11 weeks from today until April 28 with backing from investment banking group Deutsche Numis.
The Derbyshire-based company, Britain’s largest sporting goods retailer, conducted three buybacks of similar value last year, along with a separate £70m programme.
Buying: Frasers Group has announced another £80m share buyback programme
Companies often buy back their own shares in order to raise their stock price and reward investors by giving them cash or increasing their ownership stake.
But critics of buybacks say they benefit executives far more than rank-and-file employees, and the money would be better spent investing in growth, raising employee pay, or making acquisitions.
Fraser Group shares Sales have fallen about 15 percent since mid-December, having rebounded significantly from the previous summer amid strong sales growth.
Following the latest buyback announcement, share prices rose 3.45 per cent to 810.5 pence by early Monday afternoon, tripling over the past five years.
In recent years, Frasers has been engaged in a large-scale acquisition spree, often buying up cash-strapped retailers, such as Studio Retail Group, suit maker Gieves & Hawkes, and womenswear retailer Missguided.
It also became the largest shareholder in AO World, the Boohoo Group owner of Pretty Little Thing and the second-largest investor in ASOS behind Danish billionaire Anders Holch Polvsen.
The three companies saw a jump in their trading during the first part of the Covid-19 pandemic before growth slowed, and their share prices fell after lockdown restrictions were eased.
In comparison, Frasers Group was hit by store closures during 2020 and early 2021, but saw revenues recover strongly and achieved record sales of £5.6bn in the last financial year.
In the six months to October 29, the company’s revenue increased 4.4 per cent to £2.8 billion thanks to recent acquisitions, including online Australian marketplace MySale, and JD Sports Fashion’s non-core UK brands such as Tessuti, Giulio and Scotts , and shopping centers in the United Kingdom. Dundee and Luton.
The company also benefited from strong performances in Sports Direct and its international retail businesses, the latter partly boosted by orders for gaming consoles in Game Spain stores.
For the full year, Fraser expects between £500m and £550m of adjusted pre-tax profits.
(tags for translation) Daily Mail