Frasers reaps rewards of e-tailer takeovers as sales swell
Sports Direct owner Frasers has seen profit leap up after a slew of high street and e-commerce acquisitions, backing its full-year expectations.
The House of Fraser owner said it was confident in existing guidance for adjusted profit before tax of between £450m to £500m for this financial year.
The retail titan posted a 53 per cent leap in reported profit before tax, raking in £284.6m for the first-half of the year. It pointed to a disposal of £91.2m property assets and £26.3m in US retail businesses.
Under the new helm of Michael Murrary – former chief Mike Ashley’s son in law – the company has snagged acquisitions including fast fashion brands Missguided and I Saw It First.
It also recently completed a takeover of iconic Savile Row tailor Gieves & Hawkes.
High streets are facing a tough winter ahead as retailers grapple with rising cost input inflation all while shoppers themselves look to make cuts on discretionary spending.
Frasers described the macroeconomic environment as “clearly challenging,” adding that the coming year was “hard to predict with any certainty.”
Group sales surged almost 13 per cent to £2.64bn, with the retailer thanking acquisitions, new stores for its more premium Flannels brand and continued growth online.
However, its gross margins were slashed after the closure of some House of Fraser store closures, cost of goods inflation and its acquisition of Studio Retail.
A so-called elevation strategy spear-headed by Murray was “clearly paying off” after the company has diversified its portfolio to include more e-commerce and premium retailers, Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown said.
A “note of uncertainty” had caused shares to tumble on Thursday morning, she added.
Shares in the company dipped 10 per cent on Thursday afternoon, after sales slightly missed analyst expectations.
In a note to investors, the Royal Bank of Canada said sales were around four per cent below its expectations while profit before tax had exceeded forecasts.