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MARKET REPORT: Investors cheer Fraser Group’s £60m share buyback plan

Investors piled into Mike Ashley’s Frasers Group after it kicked off a surprise share buyback scheme.

The Sports Direct and House of Fraser owner will spend up to £60million purchasing its own stock between now and July despite warning less than a month ago that it would suffer a £200million hit from the pandemic. It will start the spree next Tuesday, buying a maximum 10m shares.

The retail conglomerate refused to explain beyond saying it was to ‘reduce the share capital of the company’. Businesses usually buy shares and hold them in reserve to reduce the number available to the public.

Sports Direct and House of Fraser-owner Frasers Group will spend up to £60m purchasing its own stock between now and July

This tends to push up the value of the stock but it is also a way that firms return cash to investors other than paying dividends.

Although the announcement was welcomed by the City, with Frasers climbing to the top of the FTSE 250 leaderboard, rising 5.7 per cent, or 29.5p, to 545p, it also raised eyebrows. 

The company appears to have performed a U-turn after just weeks ago warning it would suffer a £200million hit from Covid. 

Yesterday’s brief statement did not contain an update about current trading, adding to the sense of bewilderment.

Stock Watch – One Media IP Group 

Kid Creole, founder of US band Kid Creole and the Coconuts, has sold the writer’s shares of royalties to some of its biggest hits to music publisher One Media IP Group.

The artist, whose real name is August Darnell, has handed over the rights to around 250 tracks from a career that spans four decades and a 1983 Brit Award for best international artist. 

The band’s LP ‘Tropical Gangsters’ sold more than 100,000 copies in 1982.

Shares in the AIM-listed firm rose 3.2 per cent, or 0.25p, to 8p.

Frasers reopened its stores, which also includes Jack Wills and Evans Cycles, on April 12 but has said it still expects for there to be a bumpy road ahead.

It was a rollercoaster day for the FTSE 100 – it started on the front foot, quickly climbing back above 7000 points.

But a cheerful start quickly fizzled out and it closed 0.7 per cent lower, down 46.64 points, at 6923.17.

The FTSE 250 fell 0.7 per cent, or 167.33 points, to 22,330.04. Travel stocks had jumped in early trading on the latest indications that holidays to several countries will be allowed to go ahead from May 17.

A ‘green list’ of countries Britons can travel to without needing to quarantine is expected to be published this week.

But early gains fell back – and by the close British Airways-owner IAG had risen just 0.4 per cent, or 0.85p, to 203.65p and Easyjet by 0.3 per cent, or 3.5p, to 1039.5p.

Gold and silver companies fared better after prices rose to nine-week highs on Monday.

Prices stagnated yesterday, with gold down 0.9 per cent at $1,776.30 a tonne and silver down 1.8 per cent at $26.48 a tonne. But heavyweight mining companies still racked up impressive gains.

Mexico-focused Fresnillo was the top riser on the Footsie, climbing 3.4 per cent, or 27.8p, to 851.4p, closely followed by Polymetal – up 3.1 per cent, or 46.5p, to 1542p.

On the FTSE 250, Centamin advanced 2.7 per cent, or 2.85p, to 110.25p, and Petropavlovsk by 2.7 per cent, or 0.68p, to 26.36p. 

Hipgnosis Songs Fund was nearly flat (falling 0.3 per cent, or 0.4p, to 122p) despite reports it is poised to snap up the publishing rights to a catalogue of tracks by rock group Red Hot Chilli Peppers.

The deal is said to be worth about £101million but Hipgnosis has not confirmed it or made a formal statement about the agreement. 

Its rip-roaring spree has seen it buy the rights to tracks from a number of artists and producers, including many pop hits such as Eurythmics’ Sweet Dreams (Are Made of This).

Broker and wealth manager WH Ireland was on the up after it said it would return to profit for the first time in five years. It expects revenues to rise by 29 per cent to about £28million and to make a £1million profit for the year to the end of March.

Since the pandemic struck, many companies turned to their investors to raise fresh cash by selling new shares, and brokers such as WH Ireland have profited by helping to arrange this.

It rose 2.2 per cent, or 1.25p, to 58.25p.

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