Frasers Group reported a 2.8% drop in adjusted pre-tax profit to £291 million for the half-year, but held its full-year guidance as international growth and acquisitions offset weakness in core UK markets.
Profit falls despite revenue growth
Adjusted pre-tax profit fell 2.8% to £291 million (€332m) due to higher impairments and increased interest costs, though this was partially offset by a £34 million (€38.8m) gain from the disposal of the Coventry Arena and increased premiums from strategic investments.
Revenue rose 5% to £2.58 billion (€2.95bn), driven by international revenue growth of 42.8% to £736 million (€841m) due to the Holdsport and XXL acquisitions. Retail sales rose 5.1% year on year to £2.5 billion (€2.86bn).
Flannels returns to growth
Frasers highlighted “green shoots” in the luxury market as Flannels returned to sales growth with an increase in gross margin through a more relevant product offering and improved inventory holding. “We’ve made a solid start to full-year 2026 even though market conditions are tough, consumer confidence is very subdued and excess inventory continues to weigh on the industry, leading to increased promotional activity,” said CEO Michael Murray.
Full-year guidance maintained
For the full year, Frasers, which has 1,500 UK stores, expects adjusted pre-tax profit of £550–600 million (€628.4–685.6m), compared with the £560 million it made last year, helped by plans to offset the more than £50 million (€57m) annual cost increase from tax and wage rises in the UK government Budget last year through efficiencies and synergies. This forecast now includes the expected loss from XXL ASA, which was left out of prior guidance in July, and the first-time equity accounting of Hugo Boss and Accent Group.
Core UK segments weaken
Retail and gross margin both grew by 160 basis points to 46.2% and 47.3% respectively. Sales in the premium lifestyle segment fell 3.7% to £444.5 million (€508m) and declined 5.8% to £1.32 billion (€1.51bn) in UK sports retail. Group retail trading profit rose 12.2% to £441 million (€504m), also bolstered by acquisitions.
Analysts question underlying performance
Analysts at broker Shore Capital said that despite the return to top line growth “it seems to us that these numbers are flattered by the acquisitions made by the business and we do see weakness in the core UK Sports Retail and Premium Lifestyle segments”.
“While Frasers does reiterate its full-year guidance it is unclear how much is due to underlying trading in-line with expectations versus the other moving parts of what is a complex business,” Shore added. “However, the guidance also now includes the first-time equity accounting for Hugo Boss and Accent Group and it is unclear to us that these were included previously. Thus, the picture on where underlying expectations have moved look murky to us, unhelpful when trying to build investor confidence in the equity story.”
Frasers backs Hugo Boss leadership
In separate comments to reporters after the results, Frasers CFO Chris Wootton said the company was “fully supportive” of German fashion brand Hugo Boss’ strategy reset.
Frasers, which is Hugo Boss’s biggest investor with a 25.2% stake, said last week it no longer supported the fashion house’s chairman Stephan Sturm. However, Wootton said the retailer still backed Hugo Boss’s executive team. “We are fully supportive of the strategy announced […] and Daniel Grieder and his exec team,” he told the Reuters news service.
