Britain’s Frasers says move upmarket working as profit grows

This content was published on July 18, 2024 - 10:13

2 minutes

By James Davey

LONDON (Reuters) -Frasers, the British sportswear and apparel retailer that owns the Sports Direct brand, reported a 13.1% rise in annual profit and forecast further strong growth in its new financial year, saying its plan to diversify and move upmarket is working.

Shares in the FTSE-100 listed Frasers Group were up 8% on Thursday after it forecast profit growth for its 2024/25 year of up to 15%.

The group, controlled by founder Mike Ashley, is pursuing what it calls an “elevation strategy” under CEO Michael Murray, Ashley’s son in law, with investments in flagship stores, in automation and in online operations, and the strengthening of ties with brands such as Nike, Adidas and The North Face.

“Our brand relationships are in the best place they’ve ever been,” finance chief Chris Wootton told Reuters.

“At the same time, we still have a very credible and strong own brand business which complements the third party brands.”

In recent years Frasers has diversified from Sports retail into premium and luxury retail, expanded internationally and created a property investment and financial services division.

The group’s 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, Boohoo, Currys and AO World.

Frasers made an adjusted pretax profit of 544.8 million pounds ($708.4 million) in the year to April 28 – at the top end of its guidance range of 500-550 million pounds and up from 478 million pounds made in 2022/23. Revenue was 5.54 billion pounds.

“Our successful Elevation Strategy is powering our strong financial performance, with strategic brand relationships giving us better access to product across the Frasers Group,” it said.

It forecast profit of 575 million pounds to 625 million pounds for its new financial year – a year that has the Euro 2024 soccer championship behind it and the Paris Olympics coming up.

“We remain confident that our strategy will drive continued strong performance,” Frasers added.

Wootton declined to comment on whether Frasers would be interested in bidding for luxury brand Burberry, which warned on profit on Monday and has a smaller market value than Frasers.

($1 = 0.7691 pounds)

(Reporting by James Davey; Editing by Kate Holton, Elaine Hardcastle)