Frasers Group launches another share repurchase scheme

Mike Ashley’s Frasers Group launches another share repurchase programme amid dramatic rebound in buybacks

  • Frasers Group’s large roster of firms includes Flannels, Jack Wills and Slazenger
  • The business has declared buyback schemes of up to £325m since April 2022
  • FTSE 100-listed groups launched a record £55.2bn of share buybacks last year 

Sports Direct and Slazenger owner Frasers Group has begun a share buyback scheme of up to £80million, the fifth it has announced in the past year.

Mike Ashley’s company said the latest stock purchase programme would take place until 30 April and could see a maximum of 10 million shares, equivalent to 2.2 per cent of its outstanding share capital, removed from circulation.

It means the retail giant, whose roster of businesses also includes Flannels, Jack Wills and House of Frasers, has announced buyback schemes worth up to £325million since April 2022.

Purchase: Sports Direct owner Frasers Group has announced share buyback schemes worth up to £325million since April 2022

Firms often acquire their own stock in order to boost their share price and reward investors by handing them cash or increasing their ownership stake.

Buyback volumes plummeted during the height of the Covid-19 pandemic, as companies sought to preserve cash but skyrocketed after lockdown restrictions were loosened.

FTSE 100-listed groups launched a record £55.2billion of share repurchases last year, according to online trading platform AJ Bell, with around 40 per cent made by oil and gas businesses like Shell and BP.

Many critics of buybacks claim they profit executives far more than regular staff and that the money could be better spent investing in growth, boosting employee salaries, or making acquisitions.

However, Frasers Group has undertaken an expansive list of takeovers in recent years, most recently snapping up 14 premium fashion brands, including Pretty Green and Nicholas Deakins, from rival JD Sports.

That came soon after the firm revealed half-year profits had jumped by over half to £284.6million and predicted posting annual earnings of £450million to £500million.

Frasers has also built stakes in luxury suit seller Hugo Boss, JD Williams and Simply Be owner N Brown and troubled online retailer ASOS.

Sarah Riding, a retail partner at legal firm Gowling WLG, said: ‘Mike Ashley’s brand procurement focus continues unabated and is largely successful in its approach where matching the right umbrella brand to the most suitable acquisition where feel, style and vitally, demographics are concerned.

‘With nothing guaranteed in the retail M&A space, however, Ashley is clearly set on thinking laterally where risk is concerned, so is seeking to further shield against this through increasing his ownership percentage.

‘Caution will need to be heeded though as this route bolstering the share price has a clear ceiling that will need to be anticipated and offset if the approach is to work comprehensively.’

Frasers Group shares closed trading 3.2 per cent higher at 794p on Monday, making them the second-biggest riser on the FTSE 100 behind Anglo American. 

Over the past two years, they have expanded by just over two-thirds.

Michael Murray, Ashley’s successor as chief executive, will be entitled to up to £100million in share rewards if the company’s share price reaches £15 and stays there for 30 successive days sometime before October 2025.