Frasers Group: Four charts that show how Mike Ashley’s empire took over the high street

Defining Mike Ashley’s Frasers Group is not simple. With so many distinct brands spanning a broad range of platforms and formats, even experts struggle.

“How does one describe Frasers succinctly? Multi-faceted, multi-asset, multi-investment, the ‘multi-retailer,” says Clive Black, an equity analyst at Shore Capital.

The strength of this offering was demonstrated last week when the group released a robust set of annual results, prompting its shares to jump more than nine per cent in a day.

The group, which became one of the UK’s top retailers under Mike Ashley’s stewardship, 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.

These strong results were, unsurprisingly, driven by the group’s core Sports Direct brand, which has powered past its peers, including JD Sport and Decathlon in the past few years.

CEO Michael Murray has touted the company’s 2024 fiscal year as a ‘break-out’ year for future growth, pointing to progress with the implementation of its “elevation strategy” which has been designed to “rethink retail by focusing on store experience, digital and product”.

But is this strong performance from Frasers Group likely to continue? Black says more than likely.

“Distinctive and a rich history, it is a growing business whatever way one cuts it, and whilst not everyone’s cup of tea for a variety of reasons, we expect ongoing growth to persist and for Frasers to be more, not less relevant in the future. 

“There is an awful lot going on at Frasers and the allocation of capital can appear a bit discoordinated and opportunistic at times, Debenhams and Matches Fashion have not been signature moments either. 

“That said, there is a strong core here in Sports Direct and we get the talk of an ecosystem with moving parts that in time add up to a larger and more relevant business around channels, geographies, assets and functions.

“On the back of bottom-line progress, the outlook appears stable with some potential external tailwinds that may boost adjusted earnings. 

“Not for everyone, we know, we do believe that if Frasers continues to effectively execute the ongoing strategy, then the shares will appreciate, potentially notably.”

The Sports Direct name came a year after the group listed and since then the organisation has been in constant motion. Photo: Getty

Humble shop to sporting behemoth 

Frasers Group started in 1982 when Ashley opened a sports and ski shop in Maidenhead town centre. 

Over the next decade the sports retailer acquired several big name brands, including Lonsdale and Dunlop Slazenger – a tactic that would come to define the entrepreneur’s growth strategy.

In 2007, Ashley listed the firm, which at the time was trading under the name Sports World International, on the London Stock Exchange, raising £929m in an initial public listing.

The Sports Direct name came a year later, and since then, the group has been in constant motion, snapping up companies on the brink of collapse.

Although risky – as demonstrated in 2018 when the group took a £85m hit on its investment in Debenhams, reflecting the sharp drop in value of its near-30 per cent stake in the retailer – the strategy has also allowed Ashley to expand his empire far beyond the realm of sports.

Frasers Group taps the luxury market

In recent years, Frasers Group has entered the premium and luxury market with high-profile acquisitions, including House of Fraser and department store chain Flannels.

Its revenue in this sector increased sharply following these takeovers. Despite widespread softer demand for mid-market designer goods, the group said it is confident it can hold its own.

This confidence was reiterated in May when Frasers upped its stake in designer fashion brand Hugo Boss, bringing its total share in the company at the time to £305m.

Frasers Group’s “love for a bargain” has also seen it snap up sizable stakes in a range of other fashion brands listed on the London Stock Exchange.

Earlier this year the group increased its shareholding in fast-fashion group Boohoo to 22 per cent.

It first bought shares in June 2023 and became its largest single shareholder in October, passing co-founder Mahumud Kamani.

The group also has stakes in Boohoo rival Asos and last year came within touching distance of also becoming its largest single investor.

In recent years Frasers Group has made a swoop for the premium and luxury market with high profile acquisitions including House of Fraser and department store chain Flannels (Photo by David Rogers/Getty Images)

In June 2023, the group bought almost 20 per cent of Bolton-headquartered white goods retailer AO in a £75m move, which it has since increased to 23.8 per cent

Frasers Group has also built a large shareholding in JD Williams, Jacamo and Simply Be owner N Brown after first acquiring a 4.5 per cent stake in October 2022.

In January it held 20 per cent of the Manchester-headquartered retailer, placing it second behind largest shareholder Lord David Alliance.

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