The Frasers Group reported a 13.1% increase in adjusted profit before tax despite a downturn in revenue.
- The UK Sports Retail sector, including brands like Sports Direct, saw a 3.3% revenue decrease.
- Premium lifestyle sales slightly dipped due to House of Fraser closures and market softness.
- Acquisitions such as Matches and Coggles are strategic moves to strengthen Frasers’ premium position.
- Chris Wootton remains optimistic about luxury market recovery, anticipating growth in international retail and premium lifestyle sectors.
The Frasers Group has showcased resilience with a reported 13.1% increase in adjusted profit before tax, amounting to £544.8 million for the fiscal year ending 28 April 2024, even as overall revenue witnessed a decrease. This was primarily driven by the company’s commitment to its ‘elevation strategy’, focusing on enhancing the quality and positioning of its offerings.
In the UK, Sports Retail, which encompasses well-known brands such as Sports Direct, Everlast Gyms, and Game, accounted for 51.7% of the group’s sales but experienced a 3.3% decline in revenue. The company attributes this decline to broader market challenges affecting sales.
The premium lifestyle division, accounting for 21.7% of total group revenue and including brands like House of Fraser and Flannels, also faced a slight revenue dip of 1.2%. This downturn was linked to planned store closures of House of Fraser and a general slowdown in the luxury sector.
Chief Financial Officer Chris Wootton remains unfazed, attributing the current luxury market softness to cyclical trends. He stated, “We have invested a lot of money in our store estate and our digital platforms and we are in a really strong place with our Flannels business, so when the market turns, we can capture that demand. It is softer but it will come back.” However, he indicated that recovery might not be expected in the current financial year, with challenges likely persisting until fiscal year 2026 or beyond.
In pursuit of enhancing its premium market presence, Frasers has embarked on strategic acquisitions, purchasing the brand names and intellectual property of Matches for £20 million, and taking over luxury retailer Coggles from THG. Despite Matches facing significant struggles prior to its acquisition, Wootton expressed cautious optimism about future prospects, noting the potential for a relaunch given the brand’s strong customer base.
Wootton acknowledged that the luxury market downturn has impacted revenue but is optimistic about the growth potential of international retail and premium lifestyle as future group growth drivers. “We are looking at international opportunities. It’s a big growth opportunity for us so that is something you will see grow,” he explained, also referencing the anticipated comeback of the luxury market as a significant growth factor.
Frasers Group remains strategically focused on leveraging market cycles and acquisitions to drive future growth.
