Eyes on Frasers Group sales as Sports Direct owner faces cost-of-living pressure

Sport Direct owner Frasers Group will be hoping to reveal continued strong sales momentum next week despite pressure on consumer spending.

Retailers have broadly suffered a tough 2022 as surging cost inflation and cost-of-living worries for shoppers have cut into profits.

However, the Mike Ashley firm has been one of few in the sector to see its shares lift over the past year after returning to bumper profits.

Frasers, which also owns the House of Fraser and Flannels brands, revealed a pre-tax profit of £344.8 million for the year to April and is targeting another increase, to between £450 million and £500 million for the current financial year.

On Thursday December 8, the company will reveal to shareholders how it is tracking against this guidance when it unveils trading figures for the past six months.

The retailer has linked strong sales, which jumped over 30% in the previous year, to its growth strategy under Michael Murray, the son-in-law of Mike Ashley who took over the reins fully at the start of the year.

Matt Britzman, equity analyst at Hargreaves Lansdown, said the firm’s elevation strategy “appears to be in full flow” after a series of new openings and deals under the new leadership.

“Now that Mike Ashley is off the Board, we are looking out for any changes to strategic direction from the current CEO, Michael Murray,” he said.

“Frasers are also looking to expand their digital presence.

“As part of this push, they’ve acquired Missguided and I Saw It First, and it will be interesting to see how well the integrations are going in next week’s half year results.”

The company also continued its acquisition streak last month with a deal to buy historic Savile Row tailor Gieves & Hawkes.

Investment into stores following the pandemic, improved online service and marketing spend has also benefited the firm’s core set of brands.

Analysts at Numis said Sports Direct has been a driver for growth as it looks likely to deliver an acceleration in organic revenue growth.

“The core Sports Direct banner is in good health, benefitting from improving access to product, more flagship stores and an enhanced online proposition,” they added.

“With brand relationships at their healthiest ever place, increasing visibility and confidence on the profit outlook for the UK estate, Frasers is increasingly well positioned to consolidate the European sports retail sector.”