Frasers Group PLC (LSE:FRAS) is planning for Michael Murray, currently the group’s “head of elevation”, to take over from Mike Ashley as chief executive officer (CEO).
Murray is engaged to Mike Ashley’s daughter, Anna.
Should Murray assume the CEO role, Ashley would remain on the board as an executive director, although in what role is currently unclear. Until he took over as CEO in 2016, Ashley was deputy chairman but considered “the power behind the throne”.
READ Mike Ashley to step back from CEO job at Frasers
The succession announcement coincided with the release of full-year results from the group formerly known as Sports Direct.
Group revenue in the 52 weeks to 25 April fell 8.4% to £3.63bn from £3.96bn the year before. Excluding acquisitions and on a currency-neutral basis, revenue decreased by 11.4% year on year.
Underlying profit before tax plunged to £5.8mln from £117.4mln the previous year, while underlying earnings before interest, tax, depreciation and amortisation (EBITDA) tumbled 29% to £391mln from £302mln.
The group’s gross margin increased to 42.2% from 42.0%.
Underlying free cash flow (before capital expenditure) increased to £428mln compared to £263mln in the prior period.
Net debt narrowed to £249mln from £366mln a year earlier.
The board has not proposed the payment of a final dividend.
The retailer said its stores in the UK have reopened above expectations while its online channel continues to significantly outperform pre-COVID-19 periods. Nonetheless, management remains of the view that there is a high risk of future COVID-19 pandemic restrictions, likely to be over this winter and maybe beyond, as a result of which it feels unable to give guidance on the group’s likely performance in the current fiscal year.
“We appreciate the government support with the furlough scheme and business rates relief. We are predominantly a bricks and mortar business and this support has enabled us to keep stores open that otherwise might have been closed, particularly loss-making House of Fraser stores, saving many jobs. We must caution, however, that the return to pre-COVID-19 business rates will present a threat to a number of these stores. There must be a change to the outdated business rates system for us to justify the survival of some of these House of Fraser stores,” said David Daly, the non-executive chair of Frasers.
Daly said the business rates system is making the idea of acquiring a number of former Debenhams stores less attractive.
Broker Peel Hunt said the prelims were "bang in line with our thinking at the EBITDA level at £391mln (even if sales were slightly lower)".
"Clearly it has been a tricky year from a sales angle with so much uncertainty but online has held up very well here and the profit performance is a good one. It is a shame that there is not more openness from the company in terms of current trading and outlook. Management here believes that there may be further lockdowns this year and as such is not giving any guidance. Maybe we will be able to glean more at the analysts' meeting at 9 am. The valuation of the shares still makes us scratch our head a little and there does not seem to be much here to kick them on so we stay with a Hold," it said.
Shares in Frasers were up 0.8% at 620p in mid-morning trade.
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