Billionaire Mike Ashley's Frasers Hit By Higher Labor Costs And Drop In Luxury Sales

Forbes

17-07-2025

Mike Ashley's retail empire is estimated to be worth $5.5 billion. (Photo by Carl Court/Getty ... More Images)
Retail giant Frasers Group blamed the government's tax-hiking budget for adding to its labor costs at a time when it also had to grapple with a challenging retail market.
The group, owned by British retail billionaire Mike Ashley, reported on Thursday that revenue for the year to April 27 dropped 7.4% to £4.93 billion ($6.6 billion). Frasers attributed the decline to 'challenges in the luxury market' combined with the closure of its unprofitable stores.
More than half of the group's revenue is derived from its 'UK Sports' division, which recorded a 7.2% fall in sales. Its 'Premium Lifestyle' unit, which accounted for just over 21% of its total revenues last year and includes brands like Flannels and House of Fraser, saw its sales tumble by almost 15%.
But the retailer expressed a note of optimism that the market is on the mend.
'Following an especially weak period after last year's budget, both U.K. consumer confidence and trading conditions improved into 2025, and recent sales trends have been more encouraging,' the group said.
Despite the drop in revenue, Frasers still managed to report an improvement in its underlying pre-tax profits that came in at £560.2 million, a 2.8% rise from a year earlier.
In December, Frasers had downgraded its profit forecast for the fiscal year to between £550 million and £600 million, citing weak consumer confidence and tougher trading conditions. It also said at the time the government's budget would add another £50 million to it labor costs, which it confirmed on Thursday was indeed the case.
Frasers's CEO Michael Murray, said, 'I'm pleased with our performance this year, despite the headwinds caused by last year's budget.'
Since the Labour government unveiled its budget in October, businesses groups have repeatedly warned that changes, such as the payroll tax hike and minimum wage increase, would force them to cut jobs and raise prices.
And data from the Office for National Statistics (ONS) published on Thursday supports the warnings. The U.K.'s unemployment rate rose to 4.7% in the three months to May. That's the highest rate in four years. The number of job vacancies has fallen continuously for three years. Britain's inflation rose last month to 3.6%, which is well above the central bank's target of 2%.
Frasers said it's still facing cost pressures, but it's 'working hard' to mitigate these by using more artificial intelligence and sustaining a robust gross margin.
Frasers accelerated its international expansion over the past year, announcing partnerships in Australia, Asia, the Middle East and Europe. The group's strategic investments included upping it stakes in Hugo Boss, and Murray joined the board of the German fashion house.
Murray became CEO of Frasers in 2022, taking over from his father-in-law, Mike Ashley, stepped down from the company's board later that same year. Ashley has a current net worth of $5.5 billion, according to Forbes Real-Time Billionaires List.
Ashley began building his retail empire at the age of 18, when he founded Sports Direct in 1982, a business that he turned into Britain's largest sporting goods retailer. He expanded his group of businesses over the years through series of investments and acquisitions, including House of Fraser and department store chain Flannels.