Eyes on ‘elevation strategy’ progress as Frasers reveals latest trading

Frasers Group is set to shed more light on the progress of its continued “elevation strategy” and consumer sentiment when it updates investors this week.

The parent firm of brands such as Sports Direct, House of Fraser and Flannels, is expected to reveal continued sales growth over the half-year to October when it provides the update on Thursday 7 December.

In its previous update, the group reported that sales jumped over 15% to £5.6 billion as it was bolstered by acquisitions.

It had benefited from deals such as the takeover of Savile Row tailor Gieves & Hawkes, and 15 brands from competitor JD Sports such as Choice and Missy Empire.

The firm has also highlighted progress through stronger partnerships with brands such as Nike, which has been a key part in the “elevation strategy” led by chief executive Michael Murray.

Analysts said there is still a long way to go with the strategy but there are reasons for some positivity.

Aarin Chiekrie, equity analyst at Hargreaves Lansdown, said: “Early signs from a couple of recently built flagship stores look promising, but they don’t contribute enough to group performance yet to really move the dial.

“There’s a serious amount of execution risk which comes with this strategy – the structural decline of brick-and-mortar stores is a force to be reckoned with.

“Add to that the cost-of-living crisis that consumers are wrestling with, and Frasers has a lot to contend with.”

The strategy has seen Frasers work more with luxury partners and target more affluent consumers.

However, investors will therefore be keen to see how Frasers’ trade in this part of the market has fared, given subdued updates from a number of luxury retail firms including LVMH and Burberry.

These firms have been particularly knocked by weakness in China, so Frasers’ shareholders will be hoping consumer spending in the UK has been more robust.

On Thursday, investors will also be hoping for more guidance in relation to profit for the current year.

Frasers has previously indicated profits will rise this year, with these set to rise to between £500 million and £550 million, compared with £478 million last year.

The update also comes amid another interesting period of dealmaking for the retail group.

It recently sealed a deal to sell the brand and intellectual property of Missguided to Chinese shopping giant Shein, only 18 months after snapping up with women’s clothing business.

Frasers also said on Thursday it would withdraw from its deal to buy German sports retail chain Sportscheck after the brand’s owner Signa collapsed into administration, with Frasers now seeking to secure the brand’s assets in a better deal during the insolvency process.

Main image: Flannels