Excluding acquisitions and on a currency neutral basis, revenue decreased by 12.6%
 

UK Sports Retail revenue increased by 0.7%, largely due to the GAME acquisition in the period

Excluding acquisitions, revenue decreased by 14.6%, largely caused by temporary store closures due to Covid-19

UK Sports Retail like-for-like gross contribution was down 6.6%


Premium Lifestyle revenue increased by 34.9%, largely due to new stores and acquisitions of Jack Wills & Sofa.com

Excluding acquisitions, revenue increased by 18.6%

Premium Lifestyle like-for-like gross contribution was up 21.8%


European Retail revenue increased by 16.3%, largely due to the GAME acquisition in the period

Excluding acquisitions and on a currency neutral basis, revenue decreased by 15.6%(5), largely caused by temporary store closures due to Covid-19

European Retail like-for-like gross contribution was down 12.7%


Group gross margin decreased to 42.0% from 42.8%, largely due to the GAME acquisition changing the product mix


Group reported EBITDA increased by 98.7% to £551.0m compared to £277.3m in the prior period, largely due to the change in reporting as a result of implementing IFRS 16


Group underlying EBITDA increased by 5.0% to £302.1m compared to £287.8m in the prior period

Excluding acquisitions and on a currency neutral basis, underlying EBITDA was in line with the prior period


Underlying free cash flow (pre-capex) decreased to £263.1m compared to £273.3m in the prior period


Reported profit before tax was £143.5m, down 19.9% from £179.2m

Excluding IFRS 16, reported profit before tax was £262.3m up 46.4% largely due to the gain on the sale and leaseback of the Shirebrook Distribution Centre totalling £84.9m.


Underlying profit before tax decreased by 18.1% to £117.4m from £143.3m


Reported basic earnings per share fell by 14.4% to 18.5p, from 21.6p

Underlying basic earnings per share decreased by 8.0% to 16.2p from 17.6p


Reported profit after tax was £101.0m down 12.9% from £116.0m

Net debt decreased to £366.0m (£378.5m at 28 April 2019)

FY20 will likely be remembered as the most challenging year in the history of the Company. The political uncertainty around Brexit had been with us for far too long and, just as we were feeling more confident of getting some clarity and stability, the Covid-19 crisis arrived which will continue to have an impact on the economy and our business beyond FY20.

Notwithstanding the above, we have handled the challenges successfully and we have also dealt with the shadow of the significant Belgian tax enquiry for an amount of €674m which we were notified of in July 2019. We always maintained it was less than probable that material VAT and penalties would be due and thankfully, through the sterling efforts of our internal team, alongside our external advisors, this amount was commercially settled for an immaterial amount.

As of the end of February we were on track to hit our underlying EBITDA growth target of between 5-15% (pre IFRS 16 adjustments) for the period ending 26 April 2020. The Covid-19 situation had a significant impact on our business performance across the Group in March and April (and continued to do so in the post year end period) due to the shutdown of retail stores.

Thankfully, as at the date of release of these financial statements, there is a semblance of normality returning with virtually all retail stores now fully open across the Group, albeit subject to strict social distancing measures. However the future, at least in the near term, is unclear as we and indeed the world come to terms with living under the threat of Covid-19 and what its short, medium and long term effects may be. There is currently a risk of a second wave which could lead to reinstatement of lockdown restrictions and there will be economic consequences which we do not yet fully understand.

The key financial metrics for the period ended 26 April 2020 when compared with period ended 28 April 2019 are:

Group revenue has increased from £3,701.9m to £3,957.4m;

Group profit before tax has decreased from £179.2m to £143.5m;

Group underlying EBITDAhas increased from £287.8m to £302.1m; and

Group net debt has decreased from £378.5m to £366.0m.

During FY20 we made the strategic decision to rename of the Group holding company from Sports Direct International plc to Frasers Group plc. The new name better reflects the multi-brand and multi-fascia retail business we have become and I would like thank everyone who worked so hard to ensure this change was implemented smoothly and successfully.

Following a robust external audit tender process, which did not require any Government involvement, we had great pleasure in appointing RSM UK Audit LLP (RSM) as our new external auditor. We look forward to a productive working relationship with RSM over the coming years and I would like to thank the Financial Reporting Council (FRC) for the help and support that was extended to us as we conducted this process.

We continued to follow the further demise of Debenhams during the year with much frustration and disappointment as it entered administration for a second time. We raised our concerns and gave numerous warnings about what we were seeing there, much of which has materialised. Our offers of help were repeatedly disregarded and it is scandalous that this business has now been in administration twice. To date and to our knowledge, there seems to be a lack of political or regulatory interest in investigating the impact on shareholders in the initial administration, and now in the second administration we expect that further stakeholders will suffer. It has been widely reported that we are seeking the appointment of a provisional liquidator to Debenhams plc, or a winding up order, so that an independent investigation can be carried out into the actions and parties involved in the company’s administration. We are opposed, however, by certain entities which placed Debenhams plc into administration. If their opposition is successful, Debenhams plc will be dissolved, meaning that no investigation can be carried out.

The uncertainty over Brexit, followed by the Covid-19 crisis has undoubtedly resulted in unprecedented times for businesses and the consequences will be felt for the foreseeable future. We will commit ourselves to working collaboratively with all our key stakeholders to protect the future of our business and the health and livelihood of our 30,000 staff who work within the Frasers Group. During the time our stores were closed, our online business performed extremely well and I commend our staff, particularly those based at Shirebrook, for their hard work and dedication in ensuring our web operations continued and remained effective.

The biggest strategic priority for the Frasers Group is, and will continue to be, elevation. This drives our behaviours and our ways of working. We are committed to providing our customers with a multi-brand offering in a premium environment across our sport, fashion and lifestyle fascias.

FY20 saw the opening of more of our new generation stores. The new stores in Leicester and Watford are fine examples of how we are taking the elevation strategy to the next level. We also opened the Flannels flagship store on Oxford Street in September 2019 which has been an outstanding success in showcasing our elevated model to luxury brands, and the Flannels store in Newcastle was voted “Best Store Design <50,000 sq.ft.” by Drapers.

We continue to make progress with the reorganisation and elevation of the House of Fraser business. It remains a challenge but we are committed to offering a premium experience to our customers in an elevated environment.

Our acquisitions in FY20 included GAME Digital plc, Jack Wills, Sofa.com and Brookfield Unit Trust (Cheshunt Retail Park). We feel these businesses are a good strategic fit and they will add great value to our global Group and help support our elevation strategy. Our strategic investment in the Mulberry brand is also seen as a good fit for the Group and in particular for our strategy with ‘Frasers’.

In the post year end period we announced an approximate 10% investment in Hugo Boss AG through a combination of physical stock, contracts for difference and the sale of put options. This investment’s maximum aggregate exposure is approximately €200m and reflects Frasers Group’s growing relationship with Hugo Boss and belief in Hugo Boss’s long-term future.

To achieve our objectives with the elevation strategy we will rely heavily on our third party brands partnerships, particularly Nike and adidas. At times these relationships can be challenging but we aim to work with our partners as we have done so for many years in delivering the right product to our customers at the right time and at the right price.

We are committed to treating our staff at Frasers Group with dignity and respect. Our people are our finest resource and they are a critical asset in ensuring that our business is successful.

During the Covid-19 pandemic I am proud of the work we have done to keep our staff engaged with the business through regular update videos and by offering health advice and support to those who have needed it. In the UK we paid virtually all of our contracted staff in full during April, May and June even though our stores were closed for the vast majority of that time. In early March, prior to the lockdown, we sent home all staff over the age of 60 with underlying health issues which was over and above Government guidance, and whilst continuing to pay them in full.

At the AGM in September 2019 Mike Ashley announced our intention to launch a new employee bonus scheme to further reward our staff for the performance of the business and the current intention is that a resolution to approve the scheme will be put to shareholders for approval at the 2020 AGM.

We have also strengthened our leadership team. David Al-Mudallal was appointed as Chief of Staff and we hired Bev Wilkinson to lead our Internal Audit and Risk Management capability. David and Bev bring additional talent and strength to the Group.

We are always keeping under review the experience, balance and diversity of the Board and will bring additional talent onto the Board as required.

I am particularly proud of the Workers’ Representative position on the board. Cally Price is our Retail Store Manager for Sports Direct in Cardiff. Cally was elected by her colleagues and she provides a very important bridge between the workforce and the Board. We are one of only a few listed companies to have such a position and it has a been a great success for us.

As we look to the future we are keen to hire the most talented and capable people to help us to build future generations of management and leaders. We are working on a career scheme aimed at school leavers, graduates and talented individuals which we hope will enable bright, ambitious, and enthusiastic people to join Frasers Group and build a career with the Company.

During the pandemic crisis we have continued our commitment to be a good corporate citizen and extended our support where we felt we could make the most difference. We offered our fleet of vehicles to the NHS for transporting vital equipment to where it was most needed. We also offered NHS staff discounts on bikes and sporting goods equipment in our Evans and Sports Direct stores. On 15 June 2020, in England, we offered a 50% discount to all NHS staff in our Sports Direct stores as a gesture of goodwill to these fantastic individuals as our stores re-opened; it was an overwhelming success with gross sales of approximately £50m before discount and approx. £25m after discount.

As a business, we would also support a 1% increase to corporation tax on the proviso the full 1% goes directly to the NHS and we call on the government to seriously explore this idea.

We sent supplies to the Salvation Army and also a container of clothing to homeless charities in Central London. We provided free gym bags to NHS charities in Nottingham and donated approx. 4,000 Easter eggs to local hospitals in Nottingham, Chesterfield and Mansfield.

Outside of the Covid-19 crisis, during the severe flooding in South Wales at the beginning of the year, we sent 18 pallets of cleaning supplies and personal protective equipment (PPE) to help with the clean-up operation.

No dividend was paid during the year and the Board has decided not to declare a final dividend in respect of this financial period. The Company did undertake a share buyback at various points through FY20, the total number of shares purchased in the market was 17,065,981. During the period from our financial year-end to our results announcement date, no further share buyback program is currently in place.

The Covid-19 impact has created uncertainty and we consider that it will be some time before the country and indeed the world recovers. However, Frasers Group itself has always taken a long term approach to its strategy and this has helped us, and will continue to help us, through these unprecedented times. We believe our business is strong as is our balance sheet.

We will continue with the elevation strategy and the expansion of the new store format supported by our talented and loyal staff and we consider we are well placed for the future.

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