Frasers, the popular lifestyle retail group that includes well-known brands like Sports Direct, House of Fraser, Flannels, and Jack Wills, has made an unexpected announcement. They have decided to launch a new share buyback program, valued at an impressive £60 million, despite the challenges posed by the ongoing pandemic. Frasers had previously estimated that the pandemic could cost them up to £200 million, doubling their initial projection from February.

To understand the significance of this decision, it’s important to grasp the concept of a share buyback. Essentially, when a company engages in a share buyback, they repurchase their own shares from the public, which ultimately leads to a reduction in the number of shares available in the market. This reduction often drives up the share price, benefiting the company’s biggest shareholder, in this case, Mike Ashley. The program, which begins today, aims to purchase a maximum of 10 million shares. This news has been warmly received by investors, as the share price has already seen an increase of over 5% during morning trading.

Similar to many other retailers, Frasers is facing the challenge of preserving cash in these uncertain market conditions. Recently, the company faced a setback when they lost a High Court ruling regarding rent arrears. As a result, Frasers has been ordered to pay rent accumulated since the beginning of the Covid-19 pandemic. While the group reopened its business on April 12th after the easing of lockdown restrictions for non-essential retailers, they have yet to provide an update on their current trading performance.

Despite not explicitly stating the reason behind the launch of the share buyback program, Frasers simply mentioned in their announcement to the London Stock Exchange that it is a means to reduce their share capital. However, this move indicates the company’s confidence in its future prospects, despite the financial challenges posed by the ongoing pandemic. By reducing the number of shares available in the market, Frasers aims to increase the value of its remaining shares. This strategy can potentially boost investor sentiment and maximize returns for shareholders such as Mike Ashley.

Frasers will have until July to complete the share buyback, and it will be interesting to see how the company’s financial position evolves in light of the ongoing pandemic and its potential impact on the retail industry. Investors and industry observers will undoubtedly be closely monitoring Frasers’ performance in the upcoming months.

Useful links:
– [Frasers website](https://www.frasersgroup.com/)
– [London Stock Exchange](https://www.londonstockexchange.com/home/homepage.htm)