10th Dec 2020 10:12
(Alliance News) - Frasers Group PLC on Thursday reported interim profit growth despite the retailer seeing revenue fall as it was forced to temporarily close its stores throughout the period.
"Our results in this half year have been pleasing, particularly given the fact our stores in the UK were virtually all closed until mid-June. In an industry sector blighted by the decline of the High Street we are really proud of our performance and our people who helped us get there," Chair David Daly said.
Shares in the midcap retailer were 8.7% higher in London on Thursday morning at 477.20 pence each.
For the 26 weeks to October 25, Frasers recorded pretax profit of GBP106.1 million, up 18% from GBP90.2 million the year before.
Selling, distribution & administrative expenses dropped 12% to GBP728.3 million from GBP825.1 million.
Group revenue slipped 7.4% year on year to GBP1.89 billion from GBP2.04 billion. Frasers blamed the drop in revenue on the pandemic forcing national lockdowns across the globe, resulting in the temporary closure of its stores.
UK Sports Retail revenue dropped 9.8% to GBP1.07 billion, European Retail was down 3.7% to GBP352.0 million and Rest of World Retail revenue dropped 16% to GBP77.1 million. Wholesale & Licensing revenue fell 22% to GBP72.2 million.
Partially offsetting this, Premium Lifestyle revenue grew 4.8% to GBP320.4 million.
The retailer did not declare an interim dividend, unchanged on the year before.
Frasers ended the period with 1,557 retail stores, down from 1,576 at the same point the year before.
Chair Daly said: "Unfortunately the Covid-19 crisis continues to be a significant issue for all of us and we are currently living through a second wave. This has resulted in more lockdowns and restrictions which are materially impacting the business."
Amid the store closures, Daly said the firm's online business has remained "resilient".
"I do not wish to comment on the wider Covid-19 picture but from a general retail perspective it is impossible to ignore the lack of clarity of guidance when it finally arrives. Fortunately the Frasers Group is a strong business built on solid foundations. We can weather most of the storms faced this calendar year, however much of the UK High Street, which was already suffering before Covid-19, won't survive unless the government addresses the out of date business rates regime which is due to return come April 2021," Daly continued.
Frasers said it will look to continue to build its brand partnerships.
Daly said: "Our investment in our business gives us a unique position in the market. Our retail business covers multiple fascias. We own and invest in a number of dynamic and iconic brands.
"We don't simply occupy shops within retail destinations, we invest in them. In many cases we actually own the properties from which we operate. This gives us a competitive advantage over many other businesses."
From this, Frasers said it will look to improve its relationship with "important suppliers", such as Nike for Sports Direct, Burberry for Flannels, and Hugo Boss for House of Fraser.
The firm also noted it is undertaking significant investment on its flagship Sports Direct store on Oxford Street in London, confident in its future trading prospects.
Looking ahead, Daly said the firm has to be "conservative with its judgements", due to the current rolling lockdowns.
"The coming months will continue to be tough but we are well prepared and positioned for the future," Daly added.
By Paul McGowan; [email protected]
Copyright 2020 Alliance News Limited. All Rights Reserved.
Related Shares:
Frasers Group