Frasers Group, the parent company of Flannels, has announced a robust revenue growth of 12.7% for the six-month period ending in late October, reaching a total of £2.638 billion. This impressive expansion can largely be attributed to a series of strategic acquisitions made by the company. When excluding these acquisitions and disposals, the company’s revenue still increased by 3.9% on a currency-neutral basis. Despite operating in a challenging macroeconomic climate, Frasers Group has managed to maintain strong momentum in both its strategic planning and trading activities. As a result, the company is confident that it will achieve its projected adjusted profit before tax range of £450 million to £500 million for the current financial year.
Each division of the Frasers Group, including UK Sports Retail, Premium Lifestyle, International Retail, and Wholesale/Licensing, has demonstrated progress and growth. UK Sports Retail revenue rose by 11.6% to hit £1.526 billion, while Premium Lifestyle revenue increased by an impressive 24.7% to reach £533.5 million. International Retail revenue also experienced growth, rising by 5.8% to £492.2 million, and Wholesale/Licensing revenue increased by 8.6% to £86.2 million. However, the group’s gross margin decreased from 44.7% to 42%, largely due to factors such as acquisitions, disposals, and the inflation of the cost of goods.
Taking a closer look at the figures, the increase in UK Sports Retail revenue can be predominantly attributed to the acquisition of Studio Retail Limited earlier this year. Excluding acquisitions, however, the revenue actually experienced a decline of 3.1%, which was impacted by Game UK and challenging comparisons. The significant increase in Premium Lifestyle revenue was primarily driven by the expansion of Flannels stores and the sustained growth of online sales. Even when excluding acquisitions, the revenue for Premium Lifestyle still increased by 22.2%. International Retail revenue benefited from the acquisition of Sportmaster in Denmark and the growth of the Malaysian business. This increase was partially offset by the decrease in revenue resulting from the disposal of US retail businesses. However, when eliminating the impact of acquisitions, disposals, and currency shifts, international revenue still displayed a healthy growth rate of 9.2%.
Frasers Group has been actively expanding its brand portfolio through strategic acquisitions in order to reach new customer bases. Recent acquisitions include Missguided, I Saw It First, and Gieves & Hawkes, all of which contribute to the company’s strategic plans. The acquisition of Sportmaster, a leading Danish sporting goods retailer, enhances Frasers Group’s international presence in a key area of expertise. The acquisition of Studio Retail supports the company’s strategy of offering credit options to customers and has enabled the launch of the Frasers ‘Plus’ product. Acquisitions in the Premium Lifestyle segment, such as Missguided, I Saw It First, and Mysale, expand the group’s digital offerings and bring in expertise in short lead time sourcing and social media marketing. The purchase of Gieves & Hawkes, along with the leasehold of 1 Saville Row, aligns with the group’s Elevated offering. Additionally, the recent acquisition of Amara Living, a luxury homewares brand, will help establish Flannels as a reputable destination for luxury homeware.
Apart from acquisitions, Frasers Group has also been opening new physical stores to expand its presence. The luxury Flannels chain has received significant investments in regional flagship stores and expansion into the beauty sector. The company plans to continue enhancing its stores and growing its business through both organic growth and disciplined acquisitions in 2023. Key highlights include the opening of a new Flannels flagship store in Leeds and a Sports Direct flagship store in Manchester. Additionally, approximately six new Flannels stores are set to open in 2023. With the support of its brand partners, Frasers Group is actively exploring opportunities for expansion in European markets.
In terms of infrastructure, Frasers Group plans to invest around £600 million in a new distribution center and offices in Coventry over the next decade, pending planning approval. This significant investment will enhance the company’s operational capabilities and support its future growth.
In conclusion, Frasers Group’s impressive revenue growth and strategic acquisitions highlight its resilience and success in the current retail landscape. With a focus on expanding its brand portfolio, improving its stores, and investing in infrastructure, the company is well-positioned for continued growth in 2023 and beyond.
Useful links:
1. Frasers Group official website
2. Flannels official website
