Major British retailer Frasers (FRAS.L) said a drop in consumer confidence sparked by the new Labour government's tax hiking budget had forced it to lower its annual profit guidance.
Formerly called Sports Direct and majority owned by Mike Ashley, the group on Thursday joined rival JD Sports Fashion (JD.L) in warning that trading conditions had got tougher.
"Both ahead of and after the recent Budget, consumer confidence has weakened," Frasers said.
A raft of businesses have complained that the government's move to hike social security contributions and the minimum wage will lead to higher costs, lower investment and ultimately weaker economic growth.
Frasers said it was now forecasting adjusted pretax profit for its 2024/25 financial year of 550 million pounds to 600 million pounds ($699-$763 million) versus previous guidance of 575-625 million pounds and 545 million pounds made in 2023/24.
It made 299.2 million pounds on the same basis in its first half to Oct. 27, down 1.5% year-on-year. Revenue fell 8.3% to 2.54 billion pounds.
Frasers said it expected to incur at least 50 million pounds of incremental costs going into its 2025/26 year as a result of the budget.
"We are working hard to mitigate these in order to maintain our profitable growth ambitions," it said.
Last month, JD Sports Fashion warned annual profit would come in at the lower end of its guided range after a tough October of discounting, mild weather and consumer caution.
Shares in Frasers have fallen 18% so far this year and on Wednesday it was relegated from Britain's FTSE 100 blue chip index.
($1 = 0.7864 pounds)
