Frasers Group, owned by retail mogul Mike Ashley, is considered by many to be a key indicator of the health of the UK retail sector. With over 40 consumer-facing brands under its umbrella, including well-known names like Sports Direct, House of Fraser, and Flannels, as well as investments in other retailers and fashion brands, Frasers Group has a significant presence in the market.
In addition to its retail operations, the company has also been expanding its property portfolio in recent years, acquiring shopping centers and sports arenas. It has also been linked to a potential joint venture with the Crown Estate for the Princesshay estate in Exeter.
Despite the complexity of its operations, Frasers Group has shown continued growth in its latest full year results, covering the period from 28 April. While overall group sales fell by just under 1%, this was mainly due to a slowdown at Game and store closures at House of Fraser. Underlying pre-tax profits, on the other hand, exceeded expectations, rising by 13% to £544.8m.
Looking ahead, the company anticipates further growth in the new financial year, boosted by major sporting events like the recently-ended Euros and the upcoming Paris Olympics. The announcement of expected profits between £575m and £625m has also resulted in an 8% increase in the company’s shares.
According to Frasers Group CEO Michael Murray, the company’s success can be attributed to its “elevation strategy” – a move towards targeting more aspirational customers and positioning itself as the “Harrods of the high street.” This has been implemented over the past five years and has seen the introduction of premium and luxury brands into its retail portfolio.
However, the company has faced challenges in the luxury goods segment, with its premium and luxury division experiencing a slowdown in the global market. This has led to the administration of one of its brands, Matches. Despite this, Murray remains confident in the potential for growth in this sector and highlights the success of incorporating multiple brands under one roof in their stores.
While Sports Direct remains the largest contributor to Frasers Group’s sales, accounting for 52% of total sales, the company is also diversifying its operations. It has recently announced the addition of two new operating segments – property and financial services – reflecting the growing importance of these areas to the business.
As Frasers Group continues to expand its presence in the market, it will also face challenges, including changes to employment law and the impact of the luxury sector. However, with a strong cash flow and modest debt, the company is well-positioned to continue its growth through both retail and property acquisitions. With its diverse range of operations, Frasers Group is set to remain a key indicator of the health of the UK high street in the years to come.
