Home Money Frasers Group reveals £80m share repurchase programme

Frasers Group reveals £80m share repurchase programme

by Elijah
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Buyout: Frasers Group has announced another £80m share buyback program
  • Frasers Group also carried out three share buyback plans 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 will acquire around £80m more of its own shares.

Mike Ashley’s retail empire aims to buy back up to 10 million shares, the equivalent of 2 per cent of the company, over 11 weeks from today until April 28 with the support of investment banking group Deutsche Numis.

The Derbyshire-based company, which is Britain’s largest sporting goods retailer, carried out three buybacks of similar value last year, along with a separate £70m programme.

Buyout: Frasers Group has announced another £80m share buyback program

Companies often buy back their own shares 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 regular employees, and that the money could be better spent investing it in growth, increasing staff salaries or making acquisitions.

Frasers Group Shares They have fallen about 15 percent since mid-December, having recovered significantly from the previous summer amid solid sales growth.

Following the latest buyback announcement, they rose 3.45 per cent to 810.5p early on Monday afternoon and have tripled in the past five years.

In recent years, Frasers has been involved in a wide-ranging acquisition spree, often buying retailers in financial difficulty such as Studio Retail Group, suit maker Gieves & Hawkes and women’s clothing retailer Missguided.

He has also become the largest shareholder in Boohoo Group, owner of AO World and Pretty Little Thing, and the second largest investor in ASOS behind Danish billionaire Anders Holch Polvsen.

All three companies saw their operations rise during the early part of the Covid-19 pandemic before growth slowed and their share prices plummeted after lockdown restrictions were eased.

By comparison, Frasers Group was hit by store closures during 2020 and early 2021, but saw its 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 rose 4.4 per cent to £2.8bn thanks to recent acquisitions including Australian online marketplace MySale, JD Sports’ British sub-brands Fashion such as Tessuti, Giulio and Scotts, and shopping centers in Dundee and Luton.

The company also benefited from strong results from its Sports Direct and international retail businesses, the latter driven in part by game console orders at Game Spain stores.

For the full year, Frasers expects between £500 million and £550 million in adjusted pre-tax profits.

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