Frasers said it was on track to hit profit guidance of £500m-£500m on the year as the firm’s elevation strategy, the firm’s CEO said, begins to pay off.
Frasers – the parent company of Sports Direct and a host of other retail brands – reported what it called a “strong trading performance” in the first six months of its financial year.
Retail profit from trading was up 25 per cent on the year at £364m.
Comps were skewed by a £91m property disposal in the same financial period last year, meaning overall group profits of £412.5m in the six months to the end of October were down 6 per cent.
The fashion powerhouse has been ploughing ahead with a growth strategy, which includes investments in flagship stores and online trading, and deepening its relationship with major athleisure players such as Nike and Adidas.
Murray did warn that the firm’s luxury and premium segment – largely based around the Flannels brand – was being hit by cost of living pressures.
“Our long-term ambitions for our premium lifestyle business remain unchanged although it is likely that progress will remain subdued for the short to medium term in the face of a softer luxury market however, we continue to invest with confidence in our unique proposition,” he said.
Sports Direct was forced to pull out of the acquisition of German group SportScheck earlier this week after the latter fell into administration, but Murray said this morning that the group was looking at options to acquire the business in a different form.
“During the period, we have opened new elevated stores, and further strengthened brand partnerships to allow us to deliver the best consumer experience. I am also excited about the potential of our strategic investments which we expect to unlock further opportunities for the Group,” Murray said.
“We have a clear ambition to be the leading sports retailer in EMEA and we are making progress on broadening our footprint through a focused international M&A strategy.”
Revenue at the firm’s property division increased by 124.3 per cent, largely due to the acquisitions of the Luton and Dundee shopping centres and Coventry Arena.
Over the last year the brand was on the hunt for retail malls to fill with Mike Ashley’s brands.
Aarin Chiekrie, equity analyst at Hargreaves Lansdown said that Frasers started its financial year off on the “front foot”.
“Sports Direct remains the main event at the Frasers, accounting for more than half the group’s revenue. There’s significant momentum here, with the long-term goal to expand its presence across Europe and become the number one sports retailer in the region. “
“In the meantime, the group’s elevation strategy is well underway. It calls for new flagship stores to display products in a more flattering and digitally integrated environment, which has led to a material improvement in relationships with key global brands.”
She added: “The likes of Nike and Adidas have even gone as far as to name the group’s Sports Direct business as a key partner, which tells you all you need to know about its position in the global sporting goods market.”
The group’s shares lay largely flat this morning, rising 0.77 per cent, as the London market responded to the news.