Frasers adjusted profit slips, declines guidance as pursues purchases
Frasers Group PLC on Thursday reported higher annual revenue but lower adjusted profit, as the company declined to provide guidance for the new financial year, saying this is "not appropriate" consider its multiple acquisition tilts around the world.
Frasers shares were down 4.9% to 725.50 pence on Thursday morning in London, following the announcement.
The Shirebrook, England-based retailer is the owner of the House of Fraser, Sports Direct and Flannels brands. It was founded by Mike Ashley but now is led by his son-in-law, Michael Murray, as chief executive.
Murray on Thursday said the company's 'elevation strategy' is "going from strength-to-strength, with positive momentum from brand partners and strong feedback from consumers validating our strategy and giving us the confidence to continue to execute with ambition and conviction".
This is despite "tough trading conditions, subdued consumer confidence and industry-wide excess inventory levels through Half 2 and into the start of FY27".
In financial 2026, which ended on April 26, pretax profit from continuing operations was £527.8 million, up 39% from £379.9 million. However, Frasers said this was largely due to fair value losses on equity derivatives in strategic investments in financial 2025 that didn't repeat in financial 2026.
On an adjusted basis, pretax profit was £538.0 million in the recent year, down 4.0% from £560.2 million the year before, as revenue grew by 8.7% to £5.33 billion from £4.90 billion.
Within group revenue, retail revenue was £5.15 billion, up from £4.90 billion. Retail profit from trading was £912.5 million, up 22% from £747.3 million, as retail gross margin improved to 47.1% from 45.6%. Operating profit, however, was down 31% to £386.3 million from £557.5 million, largely due to net impairments.
The core Sports Direct business represented 48% of revenue in financial 2026, down from 55% in financial 2025. UK Sport revenue was £2.57 billion, down slightly from £2.70 billion, but profit from trading was up 18% to £559.4 million from £475.8. Frasers said the lower revenue was due to planned declines in Game UK standalone stores and Studio Retail.
Frasers has many investments in peers and competitors, as well as property investments. In the past two months, the company made offers to buy the remaining shares in Australian footwear retailer Accent Group Ltd and German fashion brand Hugo Boss AG.
Frasers on Thursday said it is "not appropriate" to provide financial guidance for financial 2027 "at this time", since the offers for Accent and Hugo Boss could "lead to a variety of outcomes".
Last week, Sky News reported that Frasers will be allowed to take part in the sale process of London luxury department store Harvey Nichols, bidding against Next PLC.
Frasers pays no dividend to shareholders, saying it wants to "preserve financial flexibility and facilitate future investments and other growth opportunities". However, it said on Thursday that the payment of dividends remains under review.
A share buyback started in December has repurchased 2.3 million Fraser shares, out of the 10.0 million that Frasers has commissioned Barclays Bank PLC to buy on its behalf.
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