Following today’s release of Frasers Group’s figures for the 26 weeks ending 29th October 2023; Zoe Mills, lead retail analyst at GlobalData, a leading data and analytics company, offers her view: “Frasers Group’s acquisition strategy continues to play a significant role in its performance, with group revenue up £117.6m in H1 FY2023/24 to reach £2,769.6m. This deceleration in growth to 4.4% compared to 12.7% in H1 FY2022/23 was expected amid a challenging retail market, with the luxury sector proving difficult amid the cost-of-living crisis in the UK and international markets. With the exclusion of acquisitions and disposals, revenue increased by just 0.8% in the period, highlighting more starkly the tough economic climate.
“Profits have proven resilient at the Frasers Group, with adjusted profit before tax (APBT) up 12.6% in H1 at £303.8m. The continued success of its Sports Direct elevation strategy has driven this profit performance, where improvements to product mix through brand partnerships have supported enhancements to gross margin. Indeed, the retailer confirmed that APBT for the year would be in the region of £500-£550m for FY2023/24.
“The Group’s total revenue growth was driven by its International Retail segment, which increased 13.2% in H1, reflective of the strong performance of GAME in Spain and Sports Direct across Europe. Its success here looks set to continue as the retailer highlights its ambitions to strengthen its position internationally and be the leading sports retailer in EMEA. While the announcement of SportScheck’s filing for administration put a dampener on its initial acquisition plans in Germany, Frasers Group looks set to seek out alternative options here, though it may still acquire SportScheck’s business/assets out of administration.
“The Frasers Group has been developing its Premium Lifestyle segment for several years, opening Flannels stores and improving online capacity amid a resilient premium and luxury clothing & footwear market. While the bubble has burst somewhat for this segment, excluding acquisitions and disposals revenue decreased by 11.2% in H1 FY2023/24, the Frasers Group is playing the long game as it hopes to wait out what it sees as a temporary lull in demand. Store numbers in this segment have increased from 170 stores to 205, driven by the expansion of Flannels. Its expansion plans for Premium Lifestyle must be focused outside of London, where luxury apparel has become saturated.”
