The chief executive of high street retail giant Frasers said “we felt kicked in the face” after Rachel Reeves’ autumn budget.
Frasers said that it has led to weaker confidence among shoppers and has since been witnessed budgetthat the company has reduced its profit forecast for the year.
The Mike Ashley-founded firm, which owns the Sports Direct chain, has revealed a slump in sales for the past half year and lower profits.
The group said it was on track to make a pre-tax profit of between £550m and £600m for the current year. He had previously predicted it would be between £575m and £625m.
Frasers also told shareholders that they should expect to face an extra £50m in costs due to ” In the October budget, which included an increased contribution to national insurance for firms.
He reported that “consumer confidence has been weakened by tougher trading conditions” in recent months, which put the outlook slightly weaker.
Frasers shares fell 12% to their lowest level since October 2022. The company has been kicked out of the FTSE 100 ranking of UK landscape companies.
“We felt like a lot of retail got kicked in the face,” said Chris Wotton, Frasers chief financial officer.
Frarsers revealed operating profits fell by 10.5% to £266.8m in the half year to 27 October.
The group said it achieved nearly £75m in savings and cost efficiencies, but these were offset by reductions in lower margin sales at Studio Retail and Games.
Revenues for the half-year period fell by 8.3% to £2.54bn, compared with the same period last year.
This was done Game UK and Studio RetailThe companies acquired from JD Sports and SportMaster in Denmark are among these unprofitable “right-sizing” parts of the business. This growth has been offset by the Sports Direct brand.
The group also reported that revenues at its premium premium businesses, which include Frasers and Flannels, fell by 14.1% in the first half of the year.
It said it had been hit by a shake-up of its store portfolio by the House of Fraser business and took the brand away from rival JD Sports in 2022.
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This saw the number of stores closed by these businesses from 66 to 37 last year.
Michael Murray, chief executive Frasers GroupHe said: “The first part of this year was another period of development for the group, delivering on our objectives, the elevation of the plan continues to take the business to a higher level.
“Sports Direct UK has delivered further sales growth, and our goods and financial services divisions are seeing encouraging growth.
“We are set to deliver another year of profitable growth but, with recent weaker spending confidence, until the next budget, full year 2025 APBT (adjusted profit before tax) is now expected to be in the region of £550m. 600m.”
Dan Coatsworth, investment analyst at stockbrokers AJ Bell, said: “With consumer laws about companies potentially setting prices or cutting jobs to increase card-related costs, it is not surprising that sentiment has weakened. People may worry about their own work or think that costs will go up again, so It is a natural reaction to restrain giving.
“Life isn’t going to stop grinding on the Frasers, but we’re going to have to work hard to change things. Although it’s an international business, the biggest source of its revenue is the UK.”