High street retail giant Frasers said it has witnessed “weaker” confidence among shoppers leading up to and since the autumn Budget, as the company reduced its profit forecasts for the year.
It came as the Mike Ashley-founded firm revealed a slump in sales for the past half-year, and lower profits.
The group said it is now on track for adjusted pre-tax profit between £550 million and £600 million for the current year. It had previously predicted it would be between £575 million and £625 million.
It reported that “consumer confidence has weakened and trading conditions have been tougher” in recent months as it laid out the slightly weaker outlook.
It came as Frasers revealed that operating profits fell by 10.5% to £266.8 million for the half-year to October 27.
The group said it secured almost £75 million in cost savings and efficiencies but these were somewhat offset by planned reductions in low margin sales at Studio Retail and Game.
Revenues for the six-month period dropped by 8.3% to £2.54 billion, compared with the same period a year earlier.
It said this was driven by Game UK, Studio Retail, the companies acquired from JD Sports and SportMaster in Denmark, amid efforts to “right-size” these unprofitable parts of the business.
This offset growth across the Sports Direct brand, it added.
The group also reported that revenues in its premium lifestyle business – which includes Frasers and Flannels – dropped by 14.1% for the half-year.
It said this was driven by a shake-up of its portfolio of stores across its House of Frasers business and the brands it snapped up from rival JD Sports in 2022.
This has seen the number of stores across these businesses cut from 66 to 37 over the past year.
Frasers also told shareholders that it expects to face an extra £50 million in costs because of the autumn Budget, which included increased national insurance contribution payments for firms.
Michael Murray, chief executive of Frasers Group, said: “The first half of this year has been another period of progress for the group, delivering on our objectives as the elevation strategy continues to take the business to the next level.
“Sports Direct UK delivered further sales growth, and our property and financial services divisions are seeing encouraging progress.
“We are set to deliver another year of profitable growth but, given recent weaker consumer confidence leading up to and following the Budget, full-year 2025 APBT (adjusted profit before tax) is now expected to be in the range of £550 million to £600 million.”
