Frasers Group – the owner of big brands including Sports Direct and Flannels – appears in good health according to analysts as it prepares to release its latest results.
Investors will be hoping the Derbyshire retail giant is gearing up to reveal continued strong sales momentum despite pressure on consumer spending.
Retailers have suffered a tough 2022 due to surging cost inflation and cost-of-living worries for shoppers. Joules was the most recent victim, heading into administration last month only to be bought by a new joint venture made up of its founder Tom Joule and Next.
Frasers Group has been one of few in the sector to see its share price lift in recent months after returning to profits.
The group owns a number of household names including House of Fraser, GAME, Jack Wills, Sofa.com, Evans Cycles, USC, and Everlast. It recently bought the Coventry Building Society Arena, where Coventry City plays.
The group reported a pre-tax profit of £344.8 million for the year to April and is targeting another increase, to between £450 million and £500 million for the current financial year.
On Thursday December 8, it will reveal to shareholders how it is tracking against this guidance when it unveils trading figures for the past six months.
The retailer has linked strong sales, which jumped more than 30 per cent in the previous year, to its growth strategy under Michael Murray, the son-in-law of Mike Ashley who took over the reins fully at the start of the year.
Matt Britzman, equity analyst at Hargreaves Lansdown, said the firm’s elevation strategy “appears to be in full flow” after a series of new openings and deals under the new leadership.
He said: “Now that Mike Ashley is off the board, we are looking out for any changes to strategic direction from the current CEO, Michael Murray.
“Frasers are also looking to expand their digital presence.
“As part of this push, they’ve acquired Missguided and I Saw It First, and it will be interesting to see how well the integrations are going in next week’s half year results.”
The company also continued its acquisition streak last month with a deal to buy historic Savile Row tailor Gieves & Hawkes.
Investment into stores following the pandemic, improved online service and marketing spend has also benefited the firm’s core set of brands.
Analysts at Numis said Sports Direct has been a driver for growth as it looks likely to deliver an acceleration in organic revenue growth.
They said: “The core Sports Direct banner is in good health, benefitting from improving access to product, more flagship stores and an enhanced online proposition.
“With brand relationships at their healthiest ever place, increasing visibility and confidence on the profit outlook for the UK estate, Frasers is increasingly well positioned to consolidate the European sports retail sector.”
