28th Aug 2024 10:33
(Alliance News) - Frasers Group PLC strengthened its hand once again on Wednesday, as it snapped up a stake in Accent Group Ltd to expand its presence down-under.
The Shirebrook, England-based firm, which owns the House of Fraser, Sports Direct and Flannels retail chains, is demonstrating "a ferocious appetite to rule the retail world", said AJ Bell's Russ Mould, following the news.
The 14.65% strategic investment in Accent Group, a Melbourne-based retail and distribution business, sees Frasers swoop "on yet another opportunity", chasing business in Australia and New Zealand.
Accent Group, which is prominent in the performance and lifestyle market in Australia and New Zealand, is a distributor of brands Hoka and Ugg, both of which are "cleaning up" in the footwear market. In 2024, the firm delivered AUD1.6 billion of sales from nearly 900 stores and online.
"Planting flags in yet more territories is part of Frasers' strategy to be a much bigger international player. It is now active in more than 20 countries and its goal is to provide consumers with access to the world's most loved sports, premium and luxury brands," explained Mould.
In the past year, Frasers has upped its investment in Metzingen-based Hugo Boss AG, initiated a tie-up in THG PLC, put London-based Matches into administration, and bought Dutch Retailer Twin Sport.
Reflecting on these acquisitions, Chief Executive Michael Murray said in July that it had been "a break-out year for building Frasers' future growth", with significant progress made on Frasers' Elevation Strategy.
This was despite a slip in earnings and sales, as pretax profit fell 21% to GBP507.0 million from GBP638.0 million in the year ended April 28. Adjusted pretax profit showed a 13% increase to GBP544.8 million from GBP481.8 million, at the top end of the company's GBP500 million to GBP550 million guidance range.
At the time, Frasers guided adjusted pretax profit of GBP575 million to GBP625 million in financial 2025, meaning an increase of at least 5.5%.
Accordingly, the firm's most recent investment in Accent Group sees it make good on the promise of international expansion, which Murray explained on Wednesday "is a key growth driver for the group".
AJ Bell's Mould seemed to agree.
"The investment in Accent makes perfect sense as it will enable Frasers to gain valuable insight into the Australian and New Zealand markets. As always, don't expect this investment to lead to a full takeover of the company. That isn't Fraser's style. It only pounces on businesses when they are on their knees and going for pennies."
Frasers Group shares were trading 0.4% lower at 854.00 pence in London on Wednesday morning.
By Holly Beveridge, Alliance News senior reporter
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