Frasers Group has reported a notable decline in its profit forecast due to a substantial decrease in sales, reflecting growing consumer uncertainty.
- Sales dropped by 8% with pre-tax profits plunging 33% to £207.2 million, impacted by foreign exchange fluctuations and reduction in Hugo Boss share prices.
- Declines were witnessed throughout its divisions; financial services revenue fell 20%, premium lifestyle by 14%, and UK sports retail by 7.6%.
- Despite challenges, Frasers remains optimistic about international growth with new partnerships in Australia and Africa, and hopes to advance its objective of becoming a leading global sports retailer.
- Frasers Group anticipates lower profits in the upcoming financial year owing to consumers’ declining confidence and recent budgetary changes, setting a profit range between £550 million to £600 million.
Frasers Group has reported a drop in its profit outlook, citing an 8% decline in sales amid rising consumer uncertainty. Pre-tax profits fell by 33% to £207.2 million for the half-year ending 27 October, compared to £310.2 million the previous year. The group attributes this downturn partly to fluctuating foreign exchange rates and a significant drop in Hugo Boss share prices. On an adjusted basis, the company’s profit slipped 1.5% to £299.2 million. The overall sales fell to £2.54 billion, influenced by a 20% decline in financial services revenue to £45.7 million and an 8.4% drop in the retail sector to £2.45 billion.
The retail giant recorded weaker performances across its divisions, with the premium lifestyle sector dropping 14% to £472.7 million and UK sports retail down by 7.6% to £1.37 billion. However, the expanding property portfolio provided a bright spot, boosting sales by 21% to £38.0 million. The group cautions that trading conditions have become increasingly challenging, with consumer confidence weakening, leading to a revision in their full-year outlook. They now expect adjusted profit before tax to settle between £550 million and £600 million, down from the previous estimate of £575 million to £625 million.
Michael Murray, CEO of Frasers Group, expressed optimism despite the hurdles, citing progress in their objectives through their Elevation Strategy. He highlighted growth in Sports Direct UK, advancements in the property and financial services sectors, and significant strides in international expansions across Australia and Africa. Murray stated, “The first half of this year has been another period of progress for the Group…We continue to operate with discipline…and driving further automation benefits to exceed our stock reduction targets for the period.” This strategic positioning aims at setting up recent acquisitions for long-term success and meeting the goal of becoming a global leader in sports retailing.
Murray acknowledges the impact of waning consumer confidence and budget tweaks, anticipating “at least £50 million” in additional costs for the upcoming fiscal year. Nevertheless, the group’s international endeavors and strategic growth initiatives provide a cushion against domestic challenges, reinforcing its commitment to achieving profitable growth in the long term.
Frasers Group continues to navigate uncertain market conditions with strategic investments while managing consumer confidence challenges.
