Frasers Group says it is investing in stores, digital and fulfilment for the long-term despite the continued “shadow of uncertainty cast by the ongoing Covid-19 pandemic”, as it reports rising sales and profits. But it says business rates – especially on its House of Fraser department stores – meant its premium lifestyle business reported a half-year loss.
The retail group said it continues to automate its Shirebrook warehouse and is set to a 1m sq ft warehouse in Bitburg, Germany in order to expand its fulfilment in Europe. During the half-year it also opened a new Sports Direct flagship store on Oxford Street, London and two Flannels regional flagship stores, in Sheffield and Leicester and says both are “performing above expectations”.
As yet, it says, it has been resilient to supply chain risks, but say they now need to be part of future forecasts since they could continue for some time.
Frasers Group, which owns brands including Sports Direct, Evans Cycles, Game UK – in its sports retail division – and House of Fraser, Jack Wills, Flannels and Sofa.com – premium lifestyle division – today reported sales of £2.3bn in the half-year to October 24. That’s 23.6% more than at the same time last year. Sales growth was particularly strong in its premium lifestyle division (+33.6%), largely thanks to online growth, the opening of new Flannels shops and the more general strong recovery in post-lockdown store sales last March that also boosted sales in its sports retail stores (+27.6%).
Pre-tax profits of £186m were 75.3% up on the £106.1m reported at the same time last year.
Frasers Group chief executive Mike Ashley says that while pre-tax profits for the UK sports retail were up (+111.2% to £117.4m), they were down in its premium lifestyle business, where a loss of £9.7m is reported. That’s down from £26.3m a year ago – and despite fast growth in sales as a result of “new Flannels stores, continued growth in online, growth in House of Fraser and the impact of Covid-19 related lockdowns on the prior period comparative”. The move into the red was “largely due to property and other related impairments being recognised in the period. Adjusted PBT excluding these impairment is £69.9m, compared to £26.9m in the prior period.”
He adds: “It should be noted that despite year-on-year trading improvements in the House of Fraser business, business rates in their current form continue to be a significant and disproportionate cost to House of Fraser.”
In its full-year, Frasers Group now expects to see adjusted pre-tax profits come in at between £300m and £350m.
Evans Cycles is a Top50 retailer in RXUK Top500 research, where House of Fraser and Jack Wills are Top150, Sports Direct Top250, Flannels Top350, and Sofa.com Top500.
