Frasers Group, the retail giant controlled by Mike Ashley, has reported a significant decline in sales across its UK operations, highlighting the intense pressure on high street retailers from weak consumer spending and aggressive competitor discounting.
UK Sports Division Hit by 5.8% Sales Decline
The company revealed that sales at its core UK sports division fell by 5.8% to £1.3 billion in the six months to 26 October. This drop occurred despite growth at the flagship Sports Direct chain, which was offset by what the group termed a "planned decline" at its Game stores and the Studio Retail online business.
Chief Executive Michael Murray pointed to a challenging environment for retailers. "Market conditions are tough," he stated, adding that "consumer confidence is very subdued." The group, which also owns House of Fraser, Jack Wills, and a portfolio of other brands, attributed part of the struggle to an excess of inventory across the sector, leading to widespread promotional activity.
Premium Division Closures and International Growth
Sales in the group's premium division, which includes Flannels, also fell by 3.7%. This decline was linked to the closure of several House of Fraser and Jack Wills stores, as well as outlets related to brands acquired from JD Sports in 2022, such as Pretty Green and Tessuti.
However, the overall picture for the Mike Ashley-led empire was bolstered by strong international performance. Total group sales actually rose by 5% to £2.6 billion for the half-year period, driven by acquisitions and expansion abroad. Furthermore, pre-tax profits nearly doubled to £412 million, largely due to a sharp increase in the value of the group's stake in the fashion brand Hugo Boss. Operating profit increased by 18% to £219.8 million.
Cautious Outlook Despite Profit Expectations
Despite the domestic sales slump, Frasers Group stated it still expects to meet its full-year profit guidance of up to £600 million. The company acknowledged that trading had improved compared to the previous year, which was affected by specific budgetary issues, but noted it remains weaker than the performance seen in the year to April 2024.
Murray struck a cautiously resilient tone: "We've made a solid start to the year even though market conditions are tough... While we remain cautious into the second half, our focus is unwavering as we confront these challenges head-on." The statement underscores the ongoing battle for UK retailers grappling with hesitant consumers and a crowded, promotional marketplace.
