Revenues up 4.4% at Frasers Group but it cautions on softening of luxury market

Revenues at Frasers Group were up 4.4% in the six months to 29 October to almost £2.8 billion but the group has sounded a cautious note about the short to medium term prospects of the luxury market, which has shown signs of softening on a global scale.

The parent group of Sports Direct and Flannels, among others, reported largely flat sales (up 0.8%) in its UK sports retail division at £1.49 billion, with premium lifestyle up 3.1% to £550.1 million and international sales up 13.2% at £645.8 million.

Group operating profit was up 4.4% at £298.1 million while reported pre-tax profit was up 8% £310.2 million. Adjusted profit before tax was up 12.6% at £303.8m. Group gross margin was 43% with retail gross margin at 41.8%.

CEO Michael Murray who has been spearheading the group's "elevation strategy" said the group was heading into the crucial Christmas trading period with "strong momentum". "The elevation strategy continues to drive strong trading performance across the business with good growth in Sports Direct supported by our brand partners," he said.

Murray added that the group, which has been rapidly expanding its Flannels chain of luxury boutiques and which last year acquired the premium fashion retail businesses of its rival JD Sports, said it remained ambitious for the sector but was mindful of the softening of the luxury marketing on a global scale.

The group has been linked to a potential purchase of luxury boutique Browns, whose parent Farfetch is said to be considering offloading it, and it has also been building stakes in fast fashion group Boohoo and fellow online giant ASOS, as well as luxury brands Mulberry and Hugo Boss.

"Our long-term ambitions for our Premium Lifestyle business remain unchanged although it is likely that progress will remain subdued for the short to medium term in the face of a softer luxury market however, we continue to invest with confidence in our unique proposition.

"During the period, we have opened new elevated stores, and further strengthened brand partnerships to allow us to deliver the best consumer experience. I am also excited about the potential of our strategic investments, which we expect to unlock further opportunities for the Group. We have a clear ambition to be the leading sports retailer in EMEA and we are making progress on broadening our footprint through a focused international M&A strategy," Murray explained. 

Michael Murray

Last week Frasers was obliged to pull out of a potential purchase of German sports retailer SportSheck, which operates 34 stores, after it filed for insolvency following its parent company Signa Holding filing for administration a few days earlier. Frasers remains optimistic, however, that it can acquire the sports retailer’s business or assets out of administration.

The company said trading had continued to be strong in the early weeks of the second half of the financial year and was on course to hit its profit forecasts for the full financial year.

"We are looking forward to our Christmas trading period and remain confident of achieving APBT (adjusted profit before tax) in the range £500m-£550m. We are building a diverse business for sustained multi-year growth. Our substantial ongoing investment into our elevation strategy, infrastructure and new business integrations continues to unlock that potential, and we expect further profitable growth for FY25 and beyond," Murray said.