Frasers Group reveals £80m share repurchase programme

Frasers Group shares rose on Monday after the Sports Direct and House of Fraser owner said it will acquire approximately £80million more of its own shares.

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

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

Purchase: Frasers Group has announced another £80million share buyback programme

Companies often repurchase their own stock in order to elevate their share price and reward investors by giving them cash or growing their ownership stake.

But critics of buybacks say they benefit executives far more than regular employees, and the money could be better spent investing in growth, hiking staff salaries, or making acquisitions.

Frasers Group shares have fallen by around 15 per cent since mid-December, having rebounded significantly from the previous summer amid robust sales growth.

Following the latest buyback announcement, they rose 3.45 per cent to 810.5p by early Monday afternoon and have trebled over the past five years.

In recent years, Frasers has engaged in an extensive acquisition spree, often buying retailers out of financial distress, such as Studio Retail Group, suitmaker Gieves & Hawkes and womenswear seller Missguided.

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

All three companies saw their trading jump during the early part of the Covid-19 pandemic before growth slowed, and their share prices plummeted after lockdown restrictions were relaxed.

By comparison, Frasers Group was hit by shop closures during 2020 and early 2021 but saw revenue recover strongly and achieved record sales of £5.6billion in the last financial year.

In the six months ending 29 October, the firm’s revenue increased by 4.4 per cent to £2.8billion thanks to recent takeovers, including Australian online marketplace MySale, JD Sports Fashion’s non-core UK brands like Tessuti, Giulio and Scotts, and shopping centres in Dundee and Luton. 

The company further benefited from robust performances at its Sports Direct and international retail businesses, with the latter partly uplifted by game console orders at Game Spain stores. 

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

This post first appeared on Dailymail.co.uk