UK retailer Frasers said a drop in consumer confidence sparked by the new UK Labour government's tax hiking budget had forced it to lower its annual profit guidance.
Formerly called Sports Direct and majority owned by Mike Ashley, the group today joined rival JD Sports Fashion in warning that trading conditions had got tougher.
"Both ahead of and after the recent Budget, consumer confidence has weakened," Frasers said.
Earlier this week, industry data showed lacklustre UK retail sales for November, with trade body the British Retail Consortium saying low consumer confidence and rising energy bills had dented non-food spending.
A raft of businesses have complained that the government's move to hike social security contributions and the minimum wage will lead to higher costs, lower investment and ultimately weaker economic growth.
Frasers said it was now forecasting adjusted pretax profit for its 2024/25 financial year of £550-600m compared to its previous guidance of £575-625m and £545mmade in 2023/24.
It made £299.2m on the same basis in its first half to October 27, down 1.5% year-on-year. Revenue fell 8.3% to £2.54 billion.
Frasers said it expected to incur at least £50m of incremental costs going into its 2025/26 year as a result of the budget.
"We are working hard to mitigate these in order to maintain our profitable growth ambitions," it said.
Last month, JD Sports Fashion warned annual profit would come in at the lower end of its guided range after a tough October of discounting, mild weather and consumer caution.
Major British retailer Frasers felt it had been "kicked in the face" by the new UK Labour government's budget, the sportswear and fashion group's finance chief said today.
A raft of businesses have complained that the government's move to hike social security contributions and the minimum wage will lead to higher costs, lower investment and ultimately weaker economic growth.
"Like much of retail we felt we'd been kicked in the face," Chris Wootton, Frasers' chief financial officer, told Reuters after the group cut its profit outlook.
"The skulduggery around the budget was quite mind-blowing," he said in an interview.
"The retail sector has been on its knees for a number of years and what it didn't need was this budget," said Wootton, calling it a "two-handed tax grab".
The UK government has said the budget measures were needed to fill a £22 billion "black hole" it inherited from the previous Conservative administration.
Survey data published on November 22 showed UK consumers had turned a bit less pessimistic.
However, Wootton said it was hard to say when consumer confidence would significantly improve.
"We have to deal with the here and now. We still think people have got money in their pockets, we're still a largely fully employed country. I just think confidence has been knocked."
"We have got our thinking caps on about how we mitigate it," added the finance chief.
Shares in Frasers were down 13% today in London.
They have fallen 18% so far this year and yesterday it was relegated from Britain's FTSE 100 blue chip index.
