7th Dec 2023 13:13
(Alliance News) - Frasers Group PLC reported decent half-year results and backed guidance, though a tepid showing in its luxury arm meant it was not all good news.
The Shirebrook, England-based owner of Sports Direct, Frasers and Flannels retail chains said pretax profit rose 8.0% to GBP310.2 million in the 26 weeks to October 29 from GBP287.2 million a year prior.
Revenue climbed 4.4% to GBP2.77 billion from GBP2.65 billion. Retail operating costs only increased by 0.4% to GBP755.9 million from GBP752.6 million.
The company said premium lifestyle revenue grew 3.1% year-on-year, while international retail revenue climbed 13%.
"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" Chief Executive Michael Murray said.
Murray added that looking ahead to the key Christmas trading period, the company remained confident of achieving adjusted pretax profit between GBP500 million and GBP550 million, at least 4.6% higher than GBP478.1 million reported for financial 2023.
Barclays, which backs Frasers with an 'overweight' rating on the stock, believes its potential is overlooked by investors.
"We believe the market underestimates the strength of supplier relationships, with additional brands being brought in such as On Running and The North Face. The UK Sports Direct business is performing very strongly, and if this can be replicated in Europe, there is material medium-term upside," analysts at the investment bank said.
Barclays upped its price target on the shares to 1,085 pence, from 1,060p. Frasers shares traded 0.3% lower at 905.00p each in London on Thursday afternoon.
By Eric Cunha, Alliance News news editor
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