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Highlights
- Adjusted Profit Before Tax (APBT): Decreased by 1.5% to £299.2 million, reflecting dual running costs and a decline in non-core revenue streams.
- Revenue Impact: Retail revenue dropped by 8.4%, driven by challenges in the luxury market and planned downsizing of underperforming acquisitions.
- Strategic Moves: Strengthened brand partnerships, expanded international footprint with the acquisition of Holdsport, and increased investment in Hugo Boss.
Frasers Group plc (LSE:FRAS) has released its unaudited results for the first half of FY25, ending 27 October 2024. The Group highlighted continued progress in its Elevation Strategy, including significant investments and operational improvements. However, tough trading conditions and weakened consumer confidence have tempered overall performance.
Financial Performance
Adjusted Profit Before Tax (APBT) fell 1.5% year-on-year to £299.2 million, primarily due to the absence of a one-off £20 million gain from the FY24 sale of Missguided intellectual property and costs associated with the rollout of Frasers Plus. Despite these pressures, gross margin improved to 43.4% (FY24 H1: 43.0%), attributed to a higher contribution from the Sports Direct business and reduced exposure to lower-margin operations.
Reported profit before tax dropped 33.2% to £207.2 million, weighed down by reduced foreign exchange gains and non-cash fair value movements, notably linked to a decline in Hugo Boss's share price.
Retail revenue decreased by 8.4%, reflecting planned declines in several business units, including Game UK, Studio Retail, and SportMaster Denmark, as these were restructured for sustainability. This was offset by sustained growth in Sports Direct, which benefitted from strengthened brand relationships and the success of the Group’s Elevation Strategy.
Strategic Investments
The Group has continued its aggressive investment approach, focusing on expanding its ecosystem:
- Hugo Boss: Frasers increased its strategic stake and intends to deepen commercial collaborations.
- Holdsport Acquisition: Post-period, the Group acquired Holdsport in South Africa and Namibia, marking a step toward international expansion.
Challenges and Outlook
Frasers highlighted weakening consumer confidence and tough trading conditions ahead of and following the UK’s recent Budget. These factors, coupled with expected incremental costs of at least £50 million in FY26 due to fiscal changes, have prompted the Group to adjust its FY25 APBT guidance to a range of £550 million to £600 million.
