The chief executive of high street retail giant Frasers said he felt he had been “kicked in the face” after Rachel Reeves' autumn budget.
Frasers said it had seen a decline in shopper confidence around the Budget as the company lowered its profit forecast for this year.
The company, founded by Mike Ashley, who owns the Sports Direct chain, revealed weak sales and declining profits over the past six months.
The group said it expects adjusted pre-tax profits to be between £550m and £600m this year. It had previously expected it to be worth between 575 million pounds and 625 million pounds.
Frasers also told shareholders it expected to face an additional £50m in costs from the October budget, which includes increased national insurance payments for businesses.
It gave a slightly weaker outlook, reporting that “consumer confidence has declined and trading conditions have become more challenging” in recent months.
Frasers' share price plunged 12% to its lowest level since October 2022. The company has been removed from the FTSE 100, the UK's top listed companies.
Frasers chief financial officer Chris Wootton said: “Like many in the retail industry, we felt we had been kicked in the face.”
Frasers revealed that its operating profit for the half year to October 27 fell by 10.5% to £266.8m.
The group said it had secured approximately £75m of cost savings and efficiencies, but these were offset by planned reductions in low-margin, high-sale sales at Studio Retail and Game.
Sales for the six month period were down 8.3% year-on-year to £2.54bn.
The company said the move was driven by Game UK and Studio Retail, acquired from Denmark's JD Sports and SportMaster, in an effort to “right-size” unprofitable parts of the business. It added that this offset growth across the Sports Direct brand.
The group also reported that revenue from its premium lifestyle business, which includes Frasers and Flannels, fell 14.1% in the first half.
The company said this was due to a revamp of its store portfolio across the House of Fraser business and the brand it acquired from rival JD Sports in 2022.
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This has reduced the overall number of stores across these businesses from 66 stores to 37 over the past year.
Michael Murray, Frasers Group CEO, said: “The first half of this year was another period of progress for the Group, delivering on its goals as the Elevation strategy continues to take the business to the next level.
“Sports Direct UK has delivered further sales growth and our property and financial services divisions are making encouraging progress.
“While we are on track to deliver profitable growth again this year, given the recent weakness in consumer confidence around the budget, full year 2025 APBT (adjusted profit before tax) is expected to be £550m. It is expected to be in the range of £500m to 600m. ”
“Sentiment weakens when consumers read headlines about companies potentially raising prices or cutting jobs to offset budget-related cost increases,” said Dan Coatsworth, investment analyst at brokerage AJ Bell. It's no wonder.” As people worry about their jobs or wonder whether the cost of living will rise again, the natural reaction is to rein in their spending.
“It won't stop Frasers from making a living, but we will have to work harder to switch products. Although we are an international business, our biggest source of revenue is the UK.”
