Frasers Group to buy up £60m in shares in coming months
Mike Ashley’s Frasers Group has announced plans to buy up £60m of shares between now and and July despite warning less than a month ago that it would suffer a £200 million hit from the Covid-19 pandemic.
The company, which includes House of Fraser, Sports Direct, Flannels, Evans Cycles, USC and Jack Wills, among others, will start the buying spree on Tuesday – buying a maximum 10 million shares.
No reason was give for the decision but businesses typically purchase shares and hold them in reserve to reduce the number of shares available to the public, which tends to push up the share price.
Frasers said: “The purpose of the programme is to reduce the share capital of the company.”
The move comes less than a month after bosses said the retailer could take a hit in excess of £200 million due to the Covid-19 restrictions – double its previous estimate in February.
At the time, they added that further restrictions are “almost certain”, believing a writedown against freehold values and other non-cash impairments will be required.
The company has also been critical of the Government’s response to extending the business rates holiday, complaining that the support on offer did not go far enough for big chain retailers.
Frasers reopened its estate on 12 April following the easing of lockdown restrictions for non-essential retailers. It did not give an update on current trading.