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Britain's Frasers keeps profit outlook as 'elevation strategy' pays off

Published 07/12/2023, 07:09
Updated 07/12/2023, 09:47
© Reuters.
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By James Davey

LONDON (Reuters) -Frasers, the British sportswear and apparel retailer that owns the Sports Direct (LON:FRAS) brand, said it was on track to meet full-year profit guidance after first-half earnings rose 12.6%, reflecting the success of a plan to take the group upmarket.

The FTSE 100-listed group, controlled by founder Mike Ashley, is pursuing a so-called "elevation strategy" with investments in flagship stores and in online operations, and the strengthening of ties with brands such as Nike (NYSE:NKE), Adidas (ETR:ADSGN), The North Face and On Running.

Frasers' brands also include House of Fraser, Flannels, USC and Jack Wills, and it holds strategic equity stakes in a raft of other retailers including Hugo Boss, ASOS (LON:ASOS), Boohoo (LON:BOOH), Currys and AO World.

Frasers said on Thursday it was confident of achieving adjusted pre-tax profit of 500 million to 550 million pounds ($628 million-$690 million) in the year to April 2024, up from 478 million pounds in 2022/23.

It made 303.8 million pounds in its first half to Oct. 29 on revenue that rose 4.4% to 2.77 billion pounds.

"The elevation strategy continues to drive strong trading performance across the business," said CEO Michael Murray, Ashley's son-in-law.

Industry data published on Tuesday showed British retail sales growth remained sluggish in November despite Black Friday deals as the ongoing cost-of-living squeeze prompted shoppers to rein in spending on non-essential items.

However, Frasers said its strong trading momentum had continued into the early weeks of its second half, especially at Sports Direct.

Shares in Frasers, 73% of which are owned by Ashley, were up 1% in morning trading, taking 2023 gains to 29%.

Finance chief Chris Wootton said the retailer was able to defy the downturn because of the breadth of its product offer and range of price points.

"We do cater for everyone and that gives us amazing resilience in times like these," he said in an interview, also noting that sport in general was growing in popularity.

Murray said Frasers' long-term ambitions for its Premium Lifestyle business - the Flannels and House of Fraser brands -were unchanged, although he cautioned that progress was likely to remain subdued for the short to medium term in the face of a softer luxury market.

($1 = 0.7966 pounds)

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