Frasers Group, the retail conglomerate controlled by Mike Ashley, has reported a decline in sales across its UK operations for the first half of the financial year, pointing to a challenging market and wary shoppers.
UK Retail Performance Under Pressure
The company stated that revenue at its UK sports division fell by 5.8% to £1.3 billion in the six months to 26 October. This drop occurred even as the flagship Sports Direct chain experienced growth, offset by a "planned decline" at its Game stores and the Studio Retail online business.
Michael Murray, Chief Executive of Frasers Group, described the climate as difficult. "Market conditions are tough," he said, adding that "consumer confidence is very subdued." The group, which also owns House of Fraser, Flannels, and Jack Wills, attributed part of the struggle to heavy discounting by competitors and an oversupply of inventory in the sector.
Divisional Results and Profit Outlook
Sales in the premium lifestyle division, which includes Flannels and the remaining House of Fraser stores, also decreased by 3.7%. This followed further store closures for House of Fraser, Jack Wills, and several brands acquired from JD Sports in 2022, such as Pretty Green and Tessuti.
Despite the domestic headwinds, the group's total revenue rose by 5% to £2.6 billion, buoyed by strong international expansion where it has acquired new businesses. Pre-tax profits nearly doubled to £412 million, largely due to a significant increase in the value of its stake in the Hugo Boss brand. Operating profit increased by 18% to £219.8 million.
Frasers Group stated it remains cautious about the second half of its financial year but still expects to meet its full-year profit guidance of up to £600 million.
Executive Commentary on Market Challenges
Murray acknowledged the improved trading compared to a budget-affected period last year but noted the market remains weaker. "Excess inventory in the sector continues to weigh on the wider market," the company said in its statement.
Reflecting on the period, Murray added: "We've made a solid start to [the year] even though market conditions are tough, consumer confidence is very subdued and excess inventory continues to weigh on the industry, leading to increased promotional activity. While we remain cautious into the second half, our focus is unwavering as we confront these challenges head-on."
