U.K. retailer Frasers Group has defied the economic downturn and revealed a jump in first-half sales and profits, driven by acquisitions, including the takeovers of Missguided and Studio Retail. The business, majority-owned by Mike Ashley, reported a 12.7 percent rise in revenues to £2.64 billion (€3.06bn) in the six months to Oct. 23. Pre-tax profits increased by 53 percent to £284.6m (€330.2m), although this included £91.2 million (€105.8m) in property-sale related gains which were not treated as an exceptional item.
Frasers’ growth plan – aimed at expanding its upmarket business – has been led by new chief executive Michael Murray, Ashley’s son-in-law. The strategy has seen the company grow its investment in German fashion brand Hugo Boss to a stake of up to 34 percent, while it also snapped up Savile Row tailor Gieves & Hawkes last month.
The U.K.-listed firm, formerly called Sports Direct, also owns brands including House of Fraser, Flannels, USC and Jack Wills. Its Premium Lifestyle division posted a 24.7 percent rise in revenue to £533.5 million (€619m).
The company highlighted that the economic backdrop is “clearly challenging” amid rising costs for consumers but maintained profit guidance of between £450-500 million (€522-580m) for the full year, up from the £344.8 million made in 2021-22. Group gross margin decreased to 42.0 percent from 44.7 percent, reflecting the acquisition of Studio Retail, the disposal of US retail businesses and House of Fraser store closures along with a strong prior year comparative of full price trading, cost of goods inflation, and a maintained inventory provision percentage in the current period. While most U.K. retail stocks have seen sharp declines in 2022 amid a cost-of-living crisis for consumers, shares in Frasers are up 24 percent over the year, although they fell 9 percent after the results. Frasers also said it plans to invest £600 million (€696m) over the next decade in a new distribution center and offices in Coventry, central England.
“We have delivered a strong performance during the period, despite the challenging backdrop of heightened economic uncertainty in the UK, soaring energy costs, rapidly rising inflation, a widespread cost of living crisis and continued geopolitical instability,” Frasers said.
