Eyes on Frasers Group sales as Sports Direct owner faces cost-of-living pressure

Frasers Group, owner of Sport Direct, will be hoping to account for continued strong sales momentum next week despite pressure on consumer spending.

Retailers had a tough 2022 overall as rising cost inflation and shoppers’ cost-of-living concerns eroded their profits.

However, the Mike Ashley firm has been one of the few companies in the industry to have seen its shares soar over the past year after returning to buffer profits.

Frasers, which also owns the House of Fraser and Flannels brands, posted a pre-tax profit of £344.8m for the year to April, targeting an increase of between £450m and £500m for the current fiscal year.

On Thursday, December 8th, the company will explain to shareholders how it has acted according to this guideline when it releases its trading figures for the past six months.

The retailer attributed its strong sales, which jumped over 30% last year, to its growth strategy under Mike Ashley’s son-in-law, Michael Murray, who took over the full reins at the start of the year.

Matt Britzman, equity analyst at Hargreaves Lansdown, said the firm’s upgrade strategy “seems in full flow” after a series of new expansions and deals under the new leadership.

“Now that Mike Ashley is leaving the Board, we expect any changes in strategic direction from current CEO Michael Murray,” he said.

“Frasers also wants to expand their digital assets.

“As part of this push, they’ve acquired Missguided and I Saw It First, and it will be interesting to see how well the integrations go in next week’s half-year results.”

The company also continued its acquisition streak with a deal to buy historic Savile Row tailor Gieves & Hawkes last month.

Investment in stores, improved online service and marketing spend in the wake of the pandemic also benefited the company’s core brands.

Analysts at Numis said Sports Direct is a driver for growth as it looks likely to provide an acceleration in organic revenue growth.

“The core Sports Direct banner is in good condition, benefits from improved access to the product, more flagship stores and an improved online offering,” they added.

“With brand relationships in their healthiest place ever, increased visibility and confidence in the UK mansion’s profit outlook, Frasers is increasingly well positioned to consolidate the European sports retail industry.”

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