By Sarah Young
LONDON (Reuters) - British retailer Frasers Group expects profit to rise between 5% and 15% this year as its biggest brand Sports Direct (LON:FRAS) benefits from a partnership with Nike (NYSE:NKE) and shoppers keep spending despite economic headwinds, it said on Thursday.
The FTSE 100-listed firm was founded by Mike Ashley, a former squash coach turned retail billionaire, and owns brands including House of Fraser, Flannels, USC and Jack Wills, as well as stakes in a handful of other retailers.
Frasers said demand for its brands, plus investment in improving its stores and the synergies from the strategic investments it owns in groups like Hugo Boss, would help drive more profit growth this year.
It expects adjusted pretax profit in the range of 500 million pounds to 550 million pounds for the 12 months to the end of April 2024, compared with the 478.1 million pounds ($619 million) delivered in its last financial year.
Shares in Frasers, which have gained 10% this year, were up 0.9% in early deals.
High inflation and a jump in interest rates have squeezed household incomes, making the ongoing strong sales seen by the group a surprise at the start of the year, finance chief Chris Wootton said in an interview.
That strength had now become a trend, he added, attributing it to high employment levels in Britain.
"Generally people will spend money when they've got a job," he said.
His boss is Michael Murray, Ashley's son-in-law, who has been the chief executive of Frasers since last year. Ashley still owns 72% of Frasers' equity.
Under Murray, Frasers has continued its strategy of buying stakes in different companies, recently adding shares in electrical retailers Currys and AO World and online fashion group Boohoo.
Wootton said these investments were part of Frasers' DNA and Hugo Boss was a good example of how they can work well when the executives from both groups work together on long-term plans regarding stock and locations.
($1 = 0.7724 pounds)