Frasers Group, the parent company of Sports Direct and other well-known retail brands, has announced a significant increase in profits, highlighting the success of its elevation strategy and strong brand partnerships. The company’s annual results for the 53-week period ending on April 30th showcased a strong performance across its various divisions, particularly in Sports Retail.
Total group revenue rose by 15.8% to £5.65 billion, with Sports Retail experiencing a notable increase of 16.7% to £3.08 billion. The Premium Lifestyle division also saw a jump in revenue by 14.8% to £1.213 billion, while International Retail increased by 15.2% to £1.083 billion. Additionally, Wholesale and licensing revenue rose by 12% to £188.3 million.
Though the overall performance was positive, there were certain areas of concern. The group’s gross margin decreased from 43.5% to 42.6% and operating costs increased. However, operating profit saw a significant rise of 61% to £531.8 million, and reported profit before tax nearly doubled to £660.7 million. Adjusted profit before tax (APBT) also increased by 40.7% to £478.1 million, and net profit impressively rose by 95.1% to £501.3 million.
Frasers Group acknowledged that the increase in revenue was largely due to acquisitions and the inclusion of a 53rd week in the reporting period. Without these factors, revenue would have only increased by 1.3% on a currency-neutral basis. The company also mentioned that the decrease in gross margin was influenced by the impact of House of Fraser store closures and brand consolidation, but this was partially offset by the strengthening of brand relationships in Sports Direct.
The company highlighted the successful growth of its UK Sports Retail division, primarily driven by the full-year impact of the acquisition of Frasers Group Financial Services. Excluding acquisitions and the additional week, revenue increased by 0.8%.
Despite the planned closures of House of Fraser stores, the Premium Lifestyle division still managed to see a rise in revenue. This was mainly attributed to new Flannels store openings and continued growth in online sales. Excluding acquisitions and the additional week, revenue increased by 5.7%. Frasers Group expressed confidence in its long-term growth plans for Flannels.
In International Retail, the acquisition of Sportmaster and growth in the Malaysian business helped offset the reduction in revenue from the disposal of US retail businesses. Excluding acquisitions, disposals, and the additional week, revenue fell by 2.4% on a currency-neutral basis.
Frasers Group emphasized its commitment to strengthening brand partnerships, noting that it has been listed as one of Nike’s “Top Three Global Strategic Partners.” The strategic investment in Hugo Boss has also proved beneficial in expanding its partnership. Throughout the year, Frasers Group made several acquisitions, including Sportmaster in Denmark and various brands within the Premium Lifestyle division.
Looking forward, Frasers Group expects strong profit progress in the upcoming year. The company anticipates further growth in Sports Direct, driven by strengthened brand partnerships. It also expects progress in integrating acquisitions and implementing cost mitigation exercises. Frasers Group forecasts adjusted profit before tax to be in the range of £500 million to £550 million for the next financial year.
CEO Michael Murray expressed satisfaction with the company’s performance, stating that the elevation strategy has yielded positive results across all segments. Frasers Group has made significant progress in building its sector-leading ecosystem, with the successful launch of Frasers Plus across its brands and businesses. Murray emphasized the company’s determination to unlock further growth through the acceleration of its elevation strategy.
Useful links:
1. Frasers Group Official Website
2. Sports Direct Official Website
