Frasers launches £60 million share buyback
Lifestyle retail group Frasers is to spend up £60 million between now and July to finance a new share buyback programme. The positive move comes despite the group warning the cost of the pandemic on the business could total £200 million, double its previous estimate in February.
A buyback, which reduces the number of shares available to the public, tends to push up the share price, benefiting Frasers boss Mike Ashley as its biggest shareholder. The process will start today (Tuesday), buying a maximum 10 million shares. Other investors seemed happy with the move as the share price rose over 5% in morning trading.
Frasers gave no reason for the move in its announcement to the London Stock Exchange other than saying: “The purpose of the programme is to reduce the share capital of the company”.
Like many retailers, the group, which includes Sports Direct, House of Fraser, Flannels and Jack Wills, among others, is under pressure to conserve cash.
The business has already suffered a setback in cutting costs as it lost a High Court ruling over rent arrears. Last month, Frasers was ordered to pay rents accrued since the beginning of the Covid-19 pandemic.
Since reopened its business on 12 April, following the easing of lockdown restrictions for non-essential retailers, the group has yet to give an update on current trading.
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