Young Shoppers Help Mike Ashley’s Fraser Group Defy UK Retail Blues | Fraser Group

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Mike Ashley’s Frasers Group defied the retail gloom in the first half of the year as younger shoppers more protected from the cost-of-living crisis continued to spend, including on fast-growing designer chain Flannels.

The group, which owns several chains including Sports Direct and House of Fraser, said young adults, who make up a large percentage of the group’s shoppers, are still willing to spend on clothing because they are more protected from rising energy bills, mortgage rates and even costs. the food.

“Employment numbers remain high, more people are living at home with their parents longer and spending more of their take-home pay on going out and clothing,” said Chris Wootton, Fraser’s chief financial officer.

Frasers, which includes leisure apparel brand Jack Wills and also Evans Cycles, said pre-tax profit rose 53% to £284.6m in the six months to October 23 thanks to sales which rose nearly 13% to to £2.6 billion, driven by acquisitions and the expansion of the Flannels chain. Six more Flannels stores are planned for next year.

Wootton said the group will buy more retailers in the UK and elsewhere in Europe in the coming months, as pressure on smaller businesses and brands prompts many to seek new funding.

“Expect more deals,” he said, adding that the group was in talks with a number of potential targets. “There is a lot of opportunity out there and there has to be more going forward given the current macro conditions.”

He said there was less capital available in the market and companies that chased sales without worrying about profitability were “in a bin”.

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Lots of pure theatrics [online only retailers] We focused a lot on the top line while we focused on profitability,” Wootton said.

Frasers, which acquired fast-fashion brands Missguided and saw it first, as well as online niche Studio Retail, wants to add more sports, luxury and related brands to add to its sizable portfolio.

Despite the earnings rally, shares in the group fell 7% Thursday morning, making Frasers the biggest loser in the FTSE 100, after it revealed that sales in its core sports division fell 3.1%, excluding acquisitions, although This was largely the result. Declining sales of the Game UK video game chain.

The group said it was confident of achieving its profit targets for the year. “While the macroeconomic environment is clearly challenging and the background for the coming year is difficult to predict with any certainty, we have strong strategic and business momentum behind us.”

Wootton said Fraser will continue to invest in high-street retail because that mix “makes us strong” and its brand partners want the benefits of a brick-and-mortar online store mix.

He said more House of Fraser branches are likely to close, after nine of its department stores closed last year, bringing the total number to just 34, from 59 at the time of the acquisition in 2018. However, he said the plans are under review at the time. In light of the welcome changes to the business rate regime announced by the government last month.

Fraser said it plans to invest £600m in a new distribution center and offices in Coventry, which could pave the way for a move from its current headquarters in Cherrybrook, Derbyshire. The lease on the Sherbrooke complex will expire in 2034, Wootton said, but Fraser “is likely to be very different in 10 years” and it was not clear if major operations would move over.

He said work had yet to start in Coventry as Fraser had not yet secured planning permission, but added: “We can build from the ground up in Coventry, which is a fully automated process with all green credentials including a warehouse and campus with offices and a health centre.” It’s an amazing project.”

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