Sports Direct owner Frasers reports jump in profits despite ‘challenging’ economic conditions – business live

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Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.

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UK retail group Frasers and packaging company DS Smith are both warning today that the macro-economic outlook is ‘challenging’, as they update the City with their latest financial results.

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Frasers, formerly Sports Direct, has reported a 53% jump in pre-tax profits in the 26 weeks to 23 October 2022, up to £284.6m from £186m.

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Frasers has been pushing an “Elevation Strategy” under new CEO Michael Murray, the son-in-law of founder Mike Ashley.

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Chairman David Daly says today this strategy is working, telling shareholders that:

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We have delivered a strong performance during the period, despite the challenging backdrop of heightened economic uncertainty in the UK, soaring energy costs, rapidly rising inflation, a widespread cost of living crisis and continued geopolitical instability.

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Whilst post pandemic issues with the global supply chain remain, there are signs that these are beginning to ease.

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Frasers, whose brands also include House of Fraser, Jack Wills and Evans Cycles, is sticking with its profit guidance, Daly adds:

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Whilst the macroeconomic environment is clearly challenging and the backdrop for the coming year is hard to predict with any certainty, we have strong strategic and trading momentum behind us and we remain confident in our guidance for adjusted PBT [pre-tax profits] of between £450m to £500m for this financial year.

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DS Smith, which makes corrugated packaging solutions (cardboard boxes) and runs recycling services, has also grown its earnings in the first half of the financial year.

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DS Smith’s pre-tax profits jumped 80% in the six months to the end of October.

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CEO Miles Roberts cautions that the macro-economic outlook for the rest of the financial year remains challenging. But, DS Smith have lifted its forecasts, predicting that its performance this year will be ahead of previous expectations.

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Roberts says:

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“The performance during this six month period has been strong, benefiting from our constant focus on our customers’ evolving needs during this time of significant economic volatility.

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This has enabled us to achieve continued market share gains, an increase in profitability and improvements in our key financial performance ratios.

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","elementId":"d664c88b-8c48-44df-a1e7-9c1af23760f9"},{"_type":"model.dotcomrendering.pageElements.TweetBlockElement","html":"

DS Smith #SMDS H1 results look very good and outlook 'we now expect FY23 performance to be ahead of previous expectations with H2 being consistent with H1'. Figures look great. pic.twitter.com/zZILrzR2gX

&mdash; Steve Markus (@smarkus) December 8, 2022

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Also coming up today

","elementId":"83a6357b-9114-46b5-9283-56c5d363fb5e"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"

The UK is failing to develop a skilled and globally desirable workforce, with domestic talent increasingly less attractive to overseas businesses, a new survey of international executives has found.

","elementId":"da6aa1c1-5f6f-40cb-91c0-87753ad08626"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"

Economic problems followin Brexit, plus political upheaval, means the UK and its workforce is less appealing to global business, the poll of over 5,000 executives by the Institute for Management Development showed.

","elementId":"cf5d2a7f-d5e7-4508-8c22-414f39fd9b07"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"

The UK has dropped 7 places, to 28th of 63 countries studied, on the IMD’s World Talent Ranking.

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More here.

","elementId":"f7b3f093-c218-4a0f-bfaa-17ef0df70bef"},{"_type":"model.dotcomrendering.pageElements.TweetBlockElement","html":"

&quot;Economic problems in the aftermath of Brexit, as well as turbulence in British politics, means the UK &amp; its workforce is less appealing to global business, the poll of over 5,000 executives by the Institute for Management Development showed&quot; https://t.co/N542OY8kxB

&mdash; Jim Russell (@ProducerCities) December 8, 2022

\n","url":"https://twitter.com/ProducerCities/status/1600660890478530560","id":"1600660890478530560","hasMedia":false,"role":"inline","isThirdPartyTracking":false,"source":"Twitter","elementId":"71b21410-4625-440e-ae03-718e93c50991"},{"_type":"model.dotcomrendering.pageElements.SubheadingBlockElement","html":"

The agenda.

","elementId":"ed80c7c2-c8c4-42f8-a5e2-58326d59ad0c"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"

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  • 9.30am GMT: Weekly UK economic activity data

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  • Noon GMT: ECB president Christine Lagarde speaks at the Sixth Annual Conference of the European Systemic Risk Board (ESRB) “Addressing Financial Stability Challenges”

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  • 1.30pm GMT: US weekly jobless claims

  • \n

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Key events

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Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.

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UK retail group Frasers and packaging company DS Smith are both warning today that the macro-economic outlook is ‘challenging’, as they update the City with their latest financial results.

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Frasers, formerly Sports Direct, has reported a 53% jump in pre-tax profits in the 26 weeks to 23 October 2022, up to £284.6m from £186m.

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Frasers has been pushing an “Elevation Strategy” under new CEO Michael Murray, the son-in-law of founder Mike Ashley.

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Chairman David Daly says today this strategy is working, telling shareholders that:

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\n

We have delivered a strong performance during the period, despite the challenging backdrop of heightened economic uncertainty in the UK, soaring energy costs, rapidly rising inflation, a widespread cost of living crisis and continued geopolitical instability.

\n

Whilst post pandemic issues with the global supply chain remain, there are signs that these are beginning to ease.

\n

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Frasers, whose brands also include House of Fraser, Jack Wills and Evans Cycles, is sticking with its profit guidance, Daly adds:

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\n

Whilst the macroeconomic environment is clearly challenging and the backdrop for the coming year is hard to predict with any certainty, we have strong strategic and trading momentum behind us and we remain confident in our guidance for adjusted PBT [pre-tax profits] of between £450m to £500m for this financial year.

\n

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DS Smith, which makes corrugated packaging solutions (cardboard boxes) and runs recycling services, has also grown its earnings in the first half of the financial year.

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DS Smith’s pre-tax profits jumped 80% in the six months to the end of October.

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CEO Miles Roberts cautions that the macro-economic outlook for the rest of the financial year remains challenging. But, DS Smith have lifted its forecasts, predicting that its performance this year will be ahead of previous expectations.

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Roberts says:

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“The performance during this six month period has been strong, benefiting from our constant focus on our customers’ evolving needs during this time of significant economic volatility.

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This has enabled us to achieve continued market share gains, an increase in profitability and improvements in our key financial performance ratios.

\n

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DS Smith #SMDS H1 results look very good and outlook 'we now expect FY23 performance to be ahead of previous expectations with H2 being consistent with H1'. Figures look great. pic.twitter.com/zZILrzR2gX

&mdash; Steve Markus (@smarkus) December 8, 2022

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Also coming up today

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The UK is failing to develop a skilled and globally desirable workforce, with domestic talent increasingly less attractive to overseas businesses, a new survey of international executives has found.

","elementId":"da6aa1c1-5f6f-40cb-91c0-87753ad08626"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"

Economic problems followin Brexit, plus political upheaval, means the UK and its workforce is less appealing to global business, the poll of over 5,000 executives by the Institute for Management Development showed.

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The UK has dropped 7 places, to 28th of 63 countries studied, on the IMD’s World Talent Ranking.

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More here.

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&quot;Economic problems in the aftermath of Brexit, as well as turbulence in British politics, means the UK &amp; its workforce is less appealing to global business, the poll of over 5,000 executives by the Institute for Management Development showed&quot; https://t.co/N542OY8kxB

&mdash; Jim Russell (@ProducerCities) December 8, 2022

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The agenda.

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    \n

  • 9.30am GMT: Weekly UK economic activity data

  • \n

  • Noon GMT: ECB president Christine Lagarde speaks at the Sixth Annual Conference of the European Systemic Risk Board (ESRB) “Addressing Financial Stability Challenges”

  • \n

  • 1.30pm GMT: US weekly jobless claims

  • \n

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Packaging firm DS Smith has also revealed it loaned its pension scheme £100m to help it through the market chaos following the mini-budget, which rocked the pensions industry.

It told shareholders this morning that:

In response to the market turmoil following the UK “mini- budget” in September 2022, the Group made funding support of up to £100 million to the main UK defined benefit pension scheme.

This took the form initially of a cash advance in anticipation of potential margin calls and latterly a liquidity facility.

The cash advance was fully repaid within days of being made and as at 31 October 2022 the liquidity facility remained in place but was undrawn.

The surge in government borrowing costs (measured as the yield on UK gilts) forced some pension funds to sell some of their assets in a fire sale to meet margin calls, before the Bank of England stepped in:

BT’s £47bn pension scheme has warned it may need to call on the telecommunications group for more cash “support” as it tightens its use of leveraged investment strategies, the Financial Times reports here.

Shares in Frasers have dropped 3.9% in early trading, as investors digest its warning about the macroeconomic challenges it face.

Here’s Victoria Scholar, head of investment at interactive investor, on today’s results from Frasers.

Frasers reported first half adjusted profit before tax of £267.1 million up from £192.4 million year-on-year. Revenue also increased to £2.63 billion up from £2.34 billion last year. Despite warning about the challenging macroeconomic environment, the retailer kept its full-year guidance unchanged.

Over the summer, the retailer reported record-breaking full-year results sending shares soaring thanks to the reopening of its stores post pandemic and the release of pent-up demand after covid.

Although Frasers Group’s shares had a difficult first half of the year amid the market volatility, since mid-October when investor risk appetite returned, shares have staged an impressive surge of around 50% off the intraday lows. The well-documented pressures on the consumer with the cost-of-living crisis squeezing household budgets appear to be dividing the retail sector into winners or losers with the owner of Sports Direct managing to land itself a position in the winning category thanks to its intelligent strategy to partner up with strong brands.”

Updated at 08.13 GMT

Retail analyst Nick Bubb says the most eye-catching news from Frasers today is its move to Coventry:

Well, it’s unclear what’s going to happen to the huge Sports Direct warehouse and office at Shirebrook in the North Midlands, but, as rumoured, Frasers has announced that it is to build a huge new distribution complex at Coventry, at an eye-catching cost of £600m…

Updated at 08.04 GMT

Frasers has also announced it plans to spend £600m on a new distribution centre and offices in Coventry, where it has also recently bought the Coventry Building Society Arena.

It tells shareholders:

Looking further forward to support our continued growth and ambition, we are intending on investing approx. £600m in a new distribution centre and offices in Coventry over the next ten years subject to planning, and we recently purchased the site for this exciting development for Frasers and the Coventry area.

As part of this strategy we have also purchased the CBS Arena in the city which strengthens our investment in the area and supports our future plans for the region.

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#FRAS Frasers, formerly Sports Direct, states that it stays confident on its full year guidance despite the challenging macroeconomic backdrop

&mdash; The Dude (@Redpanda73) December 8, 2022

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#FRAS Frasers, formerly Sports Direct, states that it stays confident on its full year guidance despite the challenging macroeconomic backdrop

— The Dude (@Redpanda73) December 8, 2022

Introduction: Frasers sticking with forecasts after profits jump

Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.

UK retail group Frasers and packaging company DS Smith are both warning today that the macro-economic outlook is ‘challenging’, as they update the City with their latest financial results.

Frasers, formerly Sports Direct, has reported a 53% jump in pre-tax profits in the 26 weeks to 23 October 2022, up to £284.6m from £186m.

Frasers has been pushing an “Elevation Strategy” under new CEO Michael Murray, the son-in-law of founder Mike Ashley.

A House of Fraser store in Manchester.
A House of Fraser store in Manchester. Photograph: Phil Noble/Reuters

Chairman David Daly says today this strategy is working, telling shareholders that:

We have delivered a strong performance during the period, despite the challenging backdrop of heightened economic uncertainty in the UK, soaring energy costs, rapidly rising inflation, a widespread cost of living crisis and continued geopolitical instability.

Whilst post pandemic issues with the global supply chain remain, there are signs that these are beginning to ease.

Frasers, whose brands also include House of Fraser, Jack Wills and Evans Cycles, is sticking with its profit guidance, Daly adds:

Whilst the macroeconomic environment is clearly challenging and the backdrop for the coming year is hard to predict with any certainty, we have strong strategic and trading momentum behind us and we remain confident in our guidance for adjusted PBT [pre-tax profits] of between £450m to £500m for this financial year.

DS Smith, which makes corrugated packaging solutions (cardboard boxes) and runs recycling services, has also grown its earnings in the first half of the financial year.

DS Smith’s pre-tax profits jumped 80% in the six months to the end of October.

CEO Miles Roberts cautions that the macro-economic outlook for the rest of the financial year remains challenging. But, DS Smith have lifted its forecasts, predicting that its performance this year will be ahead of previous expectations.

Roberts says:

“The performance during this six month period has been strong, benefiting from our constant focus on our customers’ evolving needs during this time of significant economic volatility.

This has enabled us to achieve continued market share gains, an increase in profitability and improvements in our key financial performance ratios.

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DS Smith #SMDS H1 results look very good and outlook 'we now expect FY23 performance to be ahead of previous expectations with H2 being consistent with H1'. Figures look great. pic.twitter.com/zZILrzR2gX

&mdash; Steve Markus (@smarkus) December 8, 2022

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DS Smith #SMDS H1 results look very good and outlook ‘we now expect FY23 performance to be ahead of previous expectations with H2 being consistent with H1’. Figures look great. pic.twitter.com/zZILrzR2gX

— Steve Markus (@smarkus) December 8, 2022

Also coming up today

The UK is failing to develop a skilled and globally desirable workforce, with domestic talent increasingly less attractive to overseas businesses, a new survey of international executives has found.

Economic problems followin Brexit, plus political upheaval, means the UK and its workforce is less appealing to global business, the poll of over 5,000 executives by the Institute for Management Development showed.

The UK has dropped 7 places, to 28th of 63 countries studied, on the IMD’s World Talent Ranking.

More here.

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&quot;Economic problems in the aftermath of Brexit, as well as turbulence in British politics, means the UK &amp; its workforce is less appealing to global business, the poll of over 5,000 executives by the Institute for Management Development showed&quot; https://t.co/N542OY8kxB

&mdash; Jim Russell (@ProducerCities) December 8, 2022

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“Economic problems in the aftermath of Brexit, as well as turbulence in British politics, means the UK & its workforce is less appealing to global business, the poll of over 5,000 executives by the Institute for Management Development showed” https://t.co/N542OY8kxB

— Jim Russell (@ProducerCities) December 8, 2022

The agenda.

  • 9.30am GMT: Weekly UK economic activity data

  • Noon GMT: ECB president Christine Lagarde speaks at the Sixth Annual Conference of the European Systemic Risk Board (ESRB) “Addressing Financial Stability Challenges”

  • 1.30pm GMT: US weekly jobless claims

The Guardian