Mike Ashley’s Frasers Group will spend £60m buying back shares despite warning less than a month ago that it would suffer a £200m pandemic hit.
The company, which owns brands including House of Fraser, Sports Direct, Evans Cycles and Jack Wills, will start the buying spree on Tuesday – buying a maximum 10m shares.
No reason was give for the decision but businesses typically purchase shares and hold them to reduce the number of shares available to the public, which tends to push up the stock price.
Shares rose 4.7pc to 539p in lunchtime trading.
Frasers said: “The purpose of the programme is to reduce the share capital of the company.”
The move comes less than a month after bosses said the retailer could take a hit in excess of £200m due to the Covid-19 restrictions – double its previous estimate in February.
At the time, they added that further restrictions are “almost certain”, believing a writedown against freehold values and other non-cash impairments will be required.
The company has also been critical of the Government’s response to extending the business rates holiday, complaining that the support on offer did not go far enough for big chain retailers.
Despite complaining of the financial woes facing the business, Frasers has also made several unsuccessful attempts to buy up rivals who have struggled during the pandemic, including Arcadia, Debenhams and Peacocks.
Frasers reopened its estate on April 12 following the easing of lockdown restrictions for non-essential retailers. It did not give an update on current trading.
During the first lockdown in March 2020, Mr Ashley tried to claim that Sports Direct was an essential retailer and should remain open, but faced a severe backlash from unions and politicians – including Boris Johnson.