THE figures, at first glance, are robust in a challenging retail environment but dig a little deeper beneath the headlines and it’s clear that Frasers Group, owner of department store Frasers, sportswear retailer Sports Direct, upmarket men’s store Flannels, Evans Cycles, Game UK and more, is not immune to the slowdown in the luxury market.

Michael Murray, chief executive of the group which is gearing up to relocate to a global headquarters campus in Warwickshire to facilitate future grown, points to a “softening” in this global luxury market, yet is bullish about future demand due to Frasers’ “unique proposition”. 

As the company attributed a strong first half to robust sales in its UK sports and international retail divisions and chalked up profits of £298.1 million, an increase of 8%, for the 26 weeks ended October 29, 2023, Mr Murray said: “Our long-term ambitions for our premium and luxury business remain unchanged and we continue to invest with confidence in our unique proposition, although it is likely that progress will remain subdued for the short to medium term in the face of a softer luxury market. 

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“However, we are excited about the potential prospects and are well placed to capitalise on opportunities in the sector.”

The group is clearly playing to its strengths with its sports and “althleisure” retail business driving growth and Mr Murray, who was appointed CEO by his father-in-law Mike Ashley last year, said Frasers is heading into the Christmas trading period with “great momentum” with its elevation strategy continuing to “drive strong trading performance across the business with good growth in Sports Direct supported by our brand partners”.

These “brand partners” include Nike, The North Face, Puma, On Running and Under Armour. And in the Frasers business, Mr Murray notes that “we are seeing a successful execution of our new concept stores, with a positive response from consumers and partners”. He said the group will continue to redefine the brand as it builds a “sustainable and productive business model”.

Russ Mould, investment director at AJ Bell, concedes that “Frasers’ quest to dominate the ‘athleisure’ and sporting equipment market appears to be going to plan when you look at the headline figures”, noting: “Its half-year results show decent progress thanks to solid gains from Sports Direct.

“But look under the bonnet and not everything is ticking over smoothly. One-fifth of its sales come from its premium lifestyle segment. If you exclude acquisitions and disposals, revenue for that division fell by 11.2% in the half-year period.

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“Many companies in the luxury market have talked about softer demand in recent months and Frasers has now joined the club. Wealthier individuals are being more cautious with their spending and this is sending shockwaves across the luxury sector which has, up until recently, merrily chugged along.”

But with adjusted profit before tax of £303.8m for the six months, an increase of 12.6% year on year, group revenues up by 4.4% to £2.76 billion and retail revenue up 4% to £2.68bn, Frasers Group is demonstrating resilience and ambition during testing times – and cementing its position as one of UK retail’s winners.