Frasers shares jumped more than eight per cent in early deals this morning after the company published its results for the year to 28 April.
The group, which became one of the UK’s top retailers under the stewardship of Mike Ashley, said adjusted profit before tax rose 13.1 per cent to £545m. That was at the “top end” of its guided range for the year of £500 to £550m.
However, group revenue from retail fell by more than £100m to £5.3bn, while overall revenue declined 0.9 per cent to £5.5bn.
The London-listed group’s reported pre-tax profit dipped to £507m, down from £638m in the prior year.
The decline was driven by a slowdown in sales across its sports and premium lifestyle divisions, which fell by 3.3 per cent and 1.1 per cent, respectively.
Frasers Group said the revenue dip within its sports division was driven by “planned sales declines in Game UK”, which closed several high street locations during the 12 months and ended a slew of in-store services, including its rewards programme, games trade-ins and in-store pre-orders.
The company added that many closed stand-alone shops had since been relocated to concessions inside larger Sports Direct stores and that Game’s reduced sales were offset by strong sales by the sports retailer, which it said had benefited from improvements to its product mix.
Overall, the division’s revenue was £2.9bn, down from £3bn the year before, and it accounted for just over 50 per cent of the group’s total revenue.
Frasers luxury sales slowdown
While demand remained high for sports-related products, Frasers Group said it had seen reduced interest in its luxury lifestyle brands, which include FLANNELS, Cruise, Van Mildert, Jack Wills, House of Fraser, Gieves and Hawkes, and Sofa.com.
This “softer market” saw the division’s revenue dip by £14m or 1.2 per cent to £1.2bn.
Frasers Group said: “While Sport moves from strength-to-strength, our premium and luxury division experienced the softening of the global luxury market felt by most high-end retailers and brands.
“We made the difficult but necessary decision to put MATCHES into administration once it became clear that too much further investment would be required to sustain the business.
“We remain committed to the luxury market and, whilst the environment is likely to remain challenging for the medium-term, we are confident in our well-invested and differentiated proposition with FLANNELS; we have strong relationships with key brand partners and remain well-placed to capitalise on longer-term opportunities.
“In our premium division, we have made good progress on consolidating the House of Fraser store estate and introduced other Frasers Group fascias to make the retail space more productive whilst increasing the product offering for the consumer.
“This new retail model with more of our concepts under one roof is proving hugely attractive and is a commercial way to incorporate multiple fascias together.”
International sales was the only division which grew during the year. Revenue increased by around £40m to just under £1.3bn.
Frasers Group’s revenue from property doubled from £36m to £72m during the 12 months, while its revenue from its financial services arm, Frasers Plus, dipped to £111m from £125m.
Group CEO Michael Murray said: “As I mark two years as chief executive at Frasers Group, I want to extend my gratitude and thanks to every member of the Frasers Group team, our board of directors, investors, and partners.
“Your ongoing commitment and support drive us forward every day, and here’s to continuing our shared success in the years to come.
“Looking ahead to 2025, we are confident that our strategy will continue to drive strong trading, bolstered by a summer of sport, the integration of recent acquisitions and synergies from our automation programme.
“We also expect to reduce the like-for-like gross inventory balance by five per cent to 15 per cent by the end of the calendar year, and have already made significant progress.
“We’re continuing to build a diversified and global retail business for sustained multi-year growth and expect to achieve another significant increase in 2025 adjusted profit before tax in the range £575m-£625m.”