Due to the ongoing impact of the pandemic and the recently imposed lockdown measures across various regions in the UK, Frasers Group, a renowned retail giant known for its popular chains such as Sports Direct, House of Fraser, and Flannels, has decided to withdraw its earnings guidance. This decision comes as a result of the closure of non-essential retail stores in London, the South East, and East of England, leading to the temporary shutdown of almost all of Frasers Group’s stores in these areas.
The sudden and unprecedented closure of stores during what would typically be a peak trading period has severely affected the company’s sales. With the uncertainty surrounding the possibility of further lockdowns nationwide and the ambiguity of when stores can operate or not, Frasers Group’s board faces challenges in committing to its previously set earnings guidance. The initial projection had forecasted a 20% to 30% increase in Underlying EBITDA for FY21, which now seems unattainable given the current circumstances.
The retail sector in the UK is grappling with the repercussions of the government’s stringent lockdown measures in response to the escalating spread of the virus. Following the closure of non-essential stores in Wales, England has also implemented similar restrictions. Furthermore, Northern Ireland is scheduled to enter lockdown from December 26, with concerns looming over the possible extension of these measures until Easter. This prolonged period of uncertainty stemming from the pandemic is posing significant challenges for Frasers Group and other retailers in the country.
The pervasive impact of the pandemic and the ever-changing landscape of lockdown measures have disrupted the normal business operations and financial projections of several major retailers in the UK. The inability to forecast store openings and the looming specter of extended lockdowns have compelled companies like Frasers Group to reassess their financial outlooks and communication strategies with investors.
For further information on the impact of COVID-19 on the retail industry, check out the following links:
1. BBC – COVID-19: Retailers endure tough Christmas despite online boost
2. Retail Gazette – COVID-19 concerns lead Frasers Group to withdraw earnings guidance
