UK retailer Frasers Group, which maintains its ambition to become the top sports retailer across the EMEA, reported a 12.6 percent increase in adjusted profit before tax (APBT) to £303.8 million (€354.6m) in H1/FY24 and said sales momentum in the early weeks of H2 were being driven by its Sports Direct business. However, the company added that a softer luxury market will likely negatively impact its premium lifestyle business in the short- to mid-term.
Based on its H1 results for the six months ended Oct. 29, the group is maintaining its full-year outlook for APBT of £500-£500 million (€583.6-€642.0m).
H1 group revenues rose by 4.4 percent to £2,680.9 million (€3.23b) from £2,652.0 million as the reported profit increased by 5.6 percent to £234.6 million (€273.8m). Gross margin increased by 70 basis points to 43.0 percent from 42.3 percent, fueled by an improved product mix at Sports Direct and reduced lower-margin sales from Game UK and Studio Retail.
The company said its improved digital capabilities will assist it with the next phase launch of its credit and loyalty program, Frasers Plus, and that the completion of its automated supply chain will enable the group to manage its inventory more efficiently and reduce its year-over-year inventory between 5 and 15 percent by H1/FY25.
H1 results by segment
International operating profit rose by 8.1 percent to £35.9 million (€41.9m) on 13 percent revenue growth to £645.8 million (€753.8m) due to increases from Game Spain and the Sports Direct business in Europe, led by Ireland, and the acquisition of MySale in Australia. Segment profit from trading improved by 5.5 percent to £78.1 million (€91.2m) despite impairments and negative currency impacts. The segment ended H1 with 583 doors, including 48 Sportmaster locations in Denmark, down 597 million in April at the end of FY23.
Premium Lifestyle segment trading profit slipped by 47 percent to £39.9 million (€46.6m), fueled by a planned clearance of surplus inventory acquired from JD Sports Fashion, higher operating costs, and the impact of ongoing closures of legacy House of Fraser stores. Operating profit was up by 14 percent to £23.1 million (€26.9m) as total segment revenues increased by 3.1 percent to £550.1 million (€642.1m). Excluding acquisitions and disposals, H1 sales were down by 11.2 percent.
Gross margin fell by 490 basis points to 36.9 percent from 41.8 percent. Flannels continues collaborating with luxury brand partners, including Hugo Boss and Christian Louboutin. While admitting some current softening in the global luxury market due to cost-of-living challenges facing consumers, Frasers said it remains confident in the prospects for premium and luxury business.
