11 December 2020
The Weekly

Frasers Group saw lower sales in its first half, as would be expected given that most of its stores were closed for part of the period. But the fall was relatively small and the company’s profits rose. In a half-year like no other (the 26 weeks to October 25), group revenue dropped by only 7.4% to £1.89bn. Admittedly, that was partly helped by the fact that the company made acquisitions in the last year. But even without those, and on a currency-neutral basis, revenue only fell by 11.2%. Its premium lifestyle division saw a 4.8% revenue increase to reach £320mn, largely due to new luxury Flannels stores, increased web sales, and a full period of the prior year acquisitions of Jack Wills and Sofa.com. Without acquisitions, the division’s revenue was down a tiny 0.7%. UK sports retail revenues fell nearly 10% to £1.07bn due to store closures (although online helped counter this), while European retail was down 3.7% at £352mn. Retail in the rest of the world was a bit tougher with a 16.3% drop to £77.1mn, while wholesale & licensing was worse. It saw a 21.5% fall to £72mn. But the group gross margin was actually up slightly at 44% and underlying EBITDA rose 25% to £226.3mn. Reported pre-tax profit rose nearly 18% to £106.1mn.

The company has also increased its investment in Hugo Boss to around 10%, as well as boosting its stake in another key supplier, Mulberry, to 37%. Premium Lifestyle, which consists of Flannels, Cruise, van mildert, House of Fraser, Jack Wills and sofa.com, saw sales rising, as mentioned. But the gross margin decreased to 47%, driven by a reduction in higher-margin concession sales within House of Fraser as a percentage of total sales. Yet underlying EBITDA for Premium Lifestyle improved from a loss of £7.6mn to a profit of £28.4mn for the period, largely due to Flannels store openings, a full period of trading for prior year acquisitions, continued operating efficiencies, and business rates relief, particularly for House of Fraser. UK Sports Retail remained the main driver of the group’s trading performance and accounted for 57% of group revenue.

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