Yahoo Finance Investors shrug off Mike Ashley's departure from Sports Direct
The City has shrugged off confirmation that Mike Ashley will step down from the helm of the retail empire he set up 40 years ago.
The Sports Direct and House of Fraser owner said Mr Ashley's prospective son-in-law Michael Murray was in line to take over as chief executive of the company next May, confirming a report in The Telegraph earlier this week.
Shares in the FTSE 250 company closed down just 0.2pc, having recovered from a 3pc drop at the open. Frasers' stock price has risen this week despite The Telegraph breaking news of Mr Ashley's decision.
Mr Murray is "head of elevation" at Frasers and is engaged to Mr Ashley's daughter Anna.
Frasers said Mr Ashley would remain on the board as an executive director. He owns about 64pc of the company.
The retailer also said it was reviewing a reward and remuneration package on the assumption Mr Murray will become chief executive, with any package subject to shareholder approval.
Frasers' shares hit their highest level since 2015 this year, following efforts to modernise and take the business more upmarket as part of its strategy which has been overseen by Mr Murray.
Jonathan Pritchard, an analyst at Peel Hunt, said: "Michael has had plenty of responsibility already, and this won't be a tea boy to hero move. It has always been a much more long-term and gradual evolution."
He said Frasers' growing focus on luxury explained why the company was bringing Mr Murray in at this point. "Mike Ashley is obviously a retail genius and there's no way you could argue anything other than that. But retail is evolving, and the group is evolving into a more luxury-based business.
"Mike is perfectly capable of moving with the times in retail, but to move in terms of retail and reinvent himself into luxury as well is a difficult task for anybody. I don't think anyone could take that on. And especially when they've got someone in the business who is closer to the Gen Y, Gen Z luxury generation than Mike is, why not use those resources as much as you can?"
News of the change at the helm came after a tough year for Frasers, with the company revealing profits had almost been wiped out in the year to the end of April and becoming the latest high street name to warn over the hit from the pandemic.
Revenues fell 8.4pc to £3.63bn compared with a year earlier as pre-tax profits slumped 94pc to £8.5m.
Frasers said virtually all its UK stores had been closed for six months of the year, due to successive lockdowns, and that its European business had also taken a hit, but noted that the impact of these closures were "not as punitive" as in the UK.
The company said government support during the pandemic had allowed it to keep stores open that it would otherwise have been forced to close, in particular its loss-making House of Fraser stores.
However, it said the winding down of these support schemes now posed a threat to the future of some of these shops.
The company said: "There must be a change to the outdated business rates system for us to justify the survival of some of these House of Fraser stores."
The company said it was unable to offer guidance for the year ahead due to continued uncertainty surrounding the pandemic.
Mr Ashley said: "Management remains of the view that there is a high risk of future Covid-19 pandemic restrictions, likely to be over this winter and maybe beyond."
