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  • Today's business and finance round up 9th December 2022

Today's business and finance round up 9th December 2022

🔗Sports Direct owner profit jump defies retail gloom

9th December 2022

Bite-sized business news from the UK and beyond

Good morning

Today's stories

  • Sports Direct owner profit jump defies retail gloom

  • Trial of disgraced payments firm begins

RETAILSports Direct owner profit jump defies retail gloom

What happened?Yesterday retail group Frasers announced profits rose 53% to £285m in the past six months as it added more brands to its portfolio including Studio Retail, ISawItFirst and MissguidedHow did we get here?Frasers, founded by billionaire Mike Ashley, began with the high street chain Sports Direct in 1982 and in recent years has been on a shopping spree snapping up struggling retail brands like House of Frasers, Jack Wills and Game.The group has also bought a 4.5% stake in N Brown Group, which owns retailers Simply Be, JD Williams and Jacamo, and snapped up a 5% stake in Asos, becoming its fourth-largest shareholder.This acquisition strategy has helped grow revenues by 13% to £2.6bn at a time when retail sales are weakening as consumers cut back amid a cost of living crisis.Frasers has been pushing an “elevation strategy” under new CEO, 31-year-old Michael Murray, the son-in-law of the founder. It’s heavily investing in Flannels, its fast-growing chain of luxury department stores aimed at younger shoppers. Frasers says these consumers are living with their parents for longer so more protected from rising energy and grocery bills, and therefore still willing to spend on clothes.Zooming out: Frasers’ new boss is being particularly incentivised to grow the business. Murray will receive a £100m bonus if he can increase the company’s share price by 2026 to £15, that’s up from its current level of about £9.

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Other stories to keep you in the loop

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  • UK banking rules face biggest shake-up in more than 30 years

  • Pubs and restaurants expect rail strikes to hit third of Christmas bookings

  • US seeks to block Microsoft's $69bn acquisition of Activision Blizzard

  • Poor performance now ‘the norm’ for some water firms, warns Ofwat

  • In The Style owners mull sale as founder returns to head fast fashion retailer

  • Purplebricks cuts jobs and ups cost savings target in turnaround plan

  • Former Theranos COO sentenced to nearly 13 years for defrauding investors

FINTECHTrial of disgraced payments firm begins

What happened?Yesterday the fraud trial of German fintech Wirecard began, former executives including the CEO are in the dock over their roles in the country’s biggest-ever accounting scandal.How did we get here?Founded in 1999 Wirecard made its name processing credit card payments for gambling websites before becoming a respectable player in the fast growing fintech industry.The company had been one of Europe’s tech darlings reaching a valuation of $28bn, listing on the Frankfurt Stock Exchange and counting former German Chancellor Angela Merkel as a supporter.But troubles came to the fore in 2019 That’s when the Financial Times published articles detailing accounting irregularities. Wirecard was accused of being a front for fraud and money laundering with claims management invented revenue to trick investors and creditors.In 2020 the company collapsed after admitting that $2bn it claimed to have in cash didn’t exist. The scandal has been described as “unparalleled” in Germany’s post-war history and damaging to the country’s reputation as a leading financial centre.Next steps: The former executives deny any wrongdoing and the trial is expected to run into 2024 with hundreds of court dates scheduled until the end of 2023 to hear the case.

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