The recent Budget has significantly impacted consumer confidence, says Frasers Group CFO, Chris Wootton.
- Frasers Group anticipates a £50m rise in its tax bill due to changes in National Insurance contributions.
- Wootton reports that consumer sentiment has weakened both before and after the Budget announcement.
- The retail giant has adjusted its profit forecasts downward by £25m amidst challenging market conditions.
- Frasers is embroiled in a boardroom dispute with Boohoo, advocating for Mike Ashley’s board participation.
Frasers Group has sounded an alarm over the adverse effects of the recent Budget on consumer confidence, as articulated by its Chief Financial Officer, Chris Wootton. He remarked that the changes in the Budget have not only influenced financial outlooks but have also visibly shaken consumer sentiment. This prevailing uncertainty is expected to elevate the group’s tax obligations by £50m next year, primarily due to adjustments in employers’ National Insurance contributions.
Wootton noted a palpable decline in consumer confidence both before and after the Budget, correlating it with persistent negative media coverage. ‘It’s obvious to anyone on the high street that the Budget has really spooked people, and frankly, the 24/7 bad news stories around it have sort of compounded that,’ he stated. This sentiment is further compounded by the group reducing its profit forecast for the year by £25m, as it grapples with what it describes as challenging trading conditions. Recent figures highlight an 8.4% drop in half-year sales within its retail division, bringing revenues down to £2.45bn.
In addition to these financial adjustments, Frasers Group also faces internal corporate dynamics, evidenced by its ongoing boardroom tussle with Boohoo. Frasers, holding a significant stake of 27% in Boohoo, is advocating for its founder Mike Ashley to secure a board position, aiming to address perceived shortcomings in Boohoo’s performance. ‘We want to see Boohoo realise its potential and at the moment, we feel it’s not,’ Wootton mentioned, emphasizing the importance of strategic improvements given their substantial investment and interest in Boohoo.
Overall, the retail climate post-Budget is marked by caution and strategic recalibration, as retail giants like Frasers navigate heightened financial pressures and complex industry relationships.
Frasers Group’s experience underscores the broader impact of current fiscal policies on retail dynamics and corporate strategies.
