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Frasers Group has reported surging half-year profits and forecast a jump in annual earnings despite revealing a hit from supply chain costs and pandemic uncertainty.

The parent company of chains including Sports Direct, House of Fraser and Flannels reported pre-tax profits of £186 million for the six months to October 24, up from £106.1 million a year earlier when trading was hit by lockdown store closures.

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Underlying pre-tax profits lifted 61.7% to £186.8 million as sales raced 23.6% higher to £2.3 billion over the half-year.

Frasers said it booked a £135.3 million impairment for the pandemic, with restrictions returning to parts of Europe, as well as to cover soaring shipping container and supply chain costs and inflation pressure on consumer spending.

Despite this, the group said it still believes it can deliver an increase in full-year profits to between £300 million and £350 million, assuming no further UK lockdowns.

This would mark a steep jump on the £5.8 million underlying pre-tax profits seen in 2020-21, when trading was hammered by Covid restrictions.

Frasers chairman David Daly said: “Unfortunately we still have the shadow of uncertainty cast by the ongoing Covid-19 pandemic, with restrictions including lockdowns returning to parts of Europe and with the emergence of new variants.

“There are also supply chain risks which to date we have proven resilient to but which must be factored into our future forecasting given these could continue for some time.

“On top of this there are the well-publicised macroeconomic factors contributing to a likely cost-of-living squeeze which could impinge on consumers’ spending plans heading into the new year.”

He added: “With a successful half-year’s trading mitigated to some extent by our conservative forecasting and based on the above-mentioned headwinds, we still believe we can achieve an adjusted pre-tax profits of between £300 million to £350 million.”

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