Frasers scraps buybacks after underestimating crisis

Sports Direct owner Frasers Group has suspended its share buyback programme after underestimating the impact of government restrictions in response to the coronavirus crisis.

Three days after Mike Ashley's retail group published a profit warning and scrapped financial guidance, Frasers said the Covid-19 would have a greater impact on retail than it expected.

On Friday evening the government told pubs, restaurants and other entertainment businesses to shut. The government did not order shops to close but several retailers, including Primark, HMV and Topshop, have decided to shut their outlets.

In its update on Monday, Frasers said it would stop buying back shares, an action that increases shareholder returns but reduces the amount of cash to support a business in tough times. Other companies putting buybacks on hold to conserve cash include Pearson and Balfour Beatty.

"Following Friday's announcement, which substantially underplayed the effect of the COVID-19 virus on retail when considering the actions that the government has taken since the announcement and will most likely take in the coming days, the company has decided to suspend its share buyback with immediate effect," Frasers said. "The company will continue to look at all options to maintain shareholder value and support."

Frasers shares fell 3.8% to 221.60p at 08:44 GMT.