Mike Ashley to step down as CEO of Frasers Group

Frasers Group, which also owns House of Fraser departments stores, Evans Cycles, and designer fashion chain Flannels, said that the controversial high street tycoon will leave his role next May as the company announced a sharp drop in profits as a result of the Covid-19 pandemic.

The company said that pre-tax profits slumped by 94.1 per cent to £8.5 million in the year to April 25, compared with £143.5m the previous year.

In a statement, Frasers Group said that the board is in discussions about “transitioning” the chief executive’s role to Mr Murray, a former nightclub promoter who is currently the company’s “head of elevation”.

“It is currently proposed that Michael Murray will assume the role of CEO on May 1, 2022,” it said. “A reward and remuneration package is now under consideration on the assumption Michael Murray will assume the CEO role. Any reward and remuneration package will be subject to any requisite shareholder approval.

“The group’s elevation strategy is transforming the business and receiving positive feedback from consumers and our brand partners, especially on projects such as the new Oxford Street Sports Direct which opened in June.

“The board considers it appropriate that Michael leads us forward on this increasingly successful elevation journey.”

Should Mr Murray assume the role, majority shareholder Mr Ashley would step down as chief executive but remain on the board as an executive director.

Discussing the outlook for Frasers, Mr Ashley said the group is “continuing to invest in its physical and digital elevation strategy and our omni-channel offering is growing in strength”.

Noting its UK stores had “reopened above expectations” with its online channel “significantly” outperforming pre-Covid-19 periods, he said: “Nonetheless, 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.

“As the effects of the Covid-19 pandemic continue to cause future uncertainty, including the Delta variant surge we are currently seeing, the board considers it cannot currently confirm with enough material accuracy what the outcome for FY22 will look like.”

Frasers said it was aided by Government financial support during the year, including the business rates holiday, but said the return to pre-pandemic rates “will present a threat” to some stores as it called for an overhaul of the property tax system.

“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 group said.

Frasers noted that it is “looking to take on a number of ex-Debenhams stores across the country” but said current business rates for the sites make it “less likely” it will consider these investments as viable.

The group also expanded over the past year with the acquisition of DW Sports fitness and gym sites from administration in a £37m deal, while it increased its stakes in fashion brands Mulberry and Hugo Boss.

Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said: “It’s no surprise that founder Mike Ashley is taking this break in the clouds to step away from the day-to-day running of the business as CEO and become an executive director instead.”

Noting that discussions to allow Mr Ashley’s prospective son-in-law to “slide into the CEO job” in 2022 had “raised plenty of eyebrows, given the fact that the former nightclub promoter has only been in the business for five years”, she said: “As head of elevation he appears to have been a major force behind the group’s ongoing makeover.

“Mike Ashley clearly has the confidence in Murray’s skills, knack and drive to push forward the metamorphosis of the business.”