Frasers Group has adjusted its profit predictions after encountering a notable sales downturn.
- The retail giant’s sales fell by 8% during the first half of the year, impacting profit expectations.
- A shift in foreign exchange rates and a drop in Hugo Boss’s share price contributed to a 33% decline in pre-tax profit.
- Sales in both financial services and retail divisions have declined significantly, with some growth in their property portfolio.
- Frasers’ CEO mentions ongoing initiatives for growth despite challenging market conditions.
Frasers Group has revised its profit outlook for the year, adjusting it to a range of £550 million to £600 million due to a substantial 8% decline in sales over the 26 weeks leading to October 27. This adjustment comes as the group’s pre-tax profit has seen a significant 33% reduction to £207.2 million, a drop attributed to unfavorable foreign exchange rates and a marked decline in the share price of Hugo Boss.
The group’s overall sales descended to £2.54 billion. Notably, there was a 20% reduction in revenue from financial services, now standing at £45.7 million, while its retail division experienced an 8.4% decline, with total sales in this segment reaching £2.45 billion. Specific sectors such as premium lifestyle and UK sports retail observed declines of 14% and 7.6%, respectively.
Despite an overall downturn, Frasers achieved a 21% increase in revenue from its expanding property portfolio, which played a role in mitigating some of the financial impacts. However, the group remains vigilant about current trading conditions described as increasingly challenging due to waning consumer confidence.
Looking forward, Frasers Group projects continued profitability but indicates that they will face at least £50 million in extra costs in the upcoming financial year, influenced in part by recent budgetary measures. CEO Michael Murray expresses a positive outlook rooted in the firm’s growth strategies, including the expansion of international partnerships and optimising their acquisition management.
Murray highlighted the company’s “Elevation Strategy”, driving advancements in automation and operational efficiency to meet stock reduction targets. “Sports Direct UK continues to grow, and our property and financial services sectors are showing promising developments,” he stated, reflecting a strategic focus on resilience and long-term growth.
While Frasers Group anticipates maintaining profitable growth, it acknowledges the hurdles presented by declining consumer confidence.
