Frasers Group has good first half, but is cautious over Covid situation
UK retail giant Frasers Group saw revenues at its domestic and European operations surging in the 26 weeks to October 24. And while its ‘rest of world retail’ division recorded a double-digit dip, overall the results looked good.
The group, which grew out of the Sports Direct business but now also owns House of Fraser, Flannels, Jack Wills and a number of other chains, said total revenue rose 23.6% to £2.339 billion.
Within that, UK sports retail was up 27.6% at £1.367 billion. Premium lifestyle surged 33.6% to £427.9 million, largely due to new Flannels stores, continued growth in online, and the strong reopening of stores after the last UK lockdown. Flannels revenue growth continued “to exceed all expectations”. It didn't say how House of Fraser stores fared.
And European retail rose 13.6% to £399.8 million, mainly due to strong growth in Ireland and easier comparisons after the lockdowns experienced in the prior year.
As mentioned, rest of world retail was down (by 14.9% to £65.6 million), but wholesale and licensing rose 10% to £79.4 million.
The group gross margin edged up to 44.7% from 44% and reported pre-tax profit rose 75.3% to £186 million. Profit after tax rose 70.3% to £143.7 million.
The company said its performance continues to be strong in both its store estate and online. But it’s staying cautious as there’s a “shadow of uncertainty” due to “a number of well publicised macroeconomic headwinds on the horizon”.
These include cost increases, supply chain issues and potential squeezes on consumer spending power. And of course, the risk is ever-present that Covid-19 measures could adversely affect the outlook as restrictions return, including a move to Plan B in England and lockdowns in Europe.
But it still thinks it can achieve an adjusted profit before tax of between £300 million and £350 million for the year to 24 April 2022 “on the proviso there are no substantial lockdowns imposed in the UK, particularly over the important Christmas period”.
The company was understandably pleased with its H1 performance and despite the uncertainty ahead, it continues to invest for the long term, including on its store estate and on its digital and fulfilment capabilities.
It opened its new Sports Direct flagship store on Oxford Street in London in June and has recently opened two Flannels regional flagship stores at Meadowhall in Sheffield and at Leicester Fosse Park. “Both are performing above expectations”, it said.
There’s continued investment in its automation too within the Shirebrook warehouse and in November it completed the purchase of land in Bitburg, Germany. The site is planned to house a new 1 million square foot warehouse and "will significantly expand” its fulfilment capabilities in Europe.
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