Frasers Group has weathered a revenue dip with a 13.1% profit rise amidst a luxury market slowdown.
- Despite the decline in sales, the company’s elevation strategy is seen as a robust framework for future growth.
- CFO Chris Wootton remains optimistic, emphasising strategic investments and acquisitions.
- Each division’s performance varied, with international retail seeing an increase while financial services declined.
- The focus on international expansion and luxury market recovery is anticipated for future profitability.
Frasers Group announced a significant 13.1% rise in adjusted profit before tax, reaching £544.8 million for the year ending 28 April 2024. This achievement occurs against a backdrop of declining revenue, attributed to their ongoing ‘elevation strategy.’
The UK Sports Retail division, most notably comprising Sports Direct, experienced a decline of 3.3% in revenue. This division accounted for 51.7% of the group’s total sales. The premium lifestyle segment, including prominent faAs such as House of Fraser and Flannels, saw a modest sales dip of 1.2%, largely due to planned store closures and a softer luxury market.
CFO Chris Wootton expressed confidence in the cyclical nature of the luxury market: ‘We are in a strong place with our Flannels business, so when the market turns, we can capture that demand.’ However, he cautioned that a full recovery in luxury demand is unlikely within the current financial year, with challenges persisting until FY26 or beyond.
Frasers Group’s recent acquisitions underscore its strategic focus. The purchase of Matches for £20 million, following its administration, and the acquisition of Coggles highlight a proactive approach. Wootton acknowledged Matches’ struggles pre-acquisition but cited it as a calculated move to reinforce the group’s luxury proposition.
The revenue breakdown reveals varied division performances. International retail improved by 3.3%, accounting for 23.3% of total revenue, while financial services faced an 11.2% decline. Notably, property ventures witnessed substantial growth with a 101.4% increase.
Wootton highlighted further opportunities in international retail and luxury markets, stressing their potential to drive future growth. With the UK luxury market shifting from boutiques to national retailers, Frasers Group’s strategic acquisitions position it advantageously for recovery.
Frasers Group’s strategic investments and acquisitions are poised to leverage future market opportunities and drive sustained growth.
