Frasers Group sees profits dip in ‘most challenging year’ in company’s history

Frasers Group has reported a 19.9 percent drop in profit in what it described as “the most challenging year in the history of the company”.

That’s despite sales increasing 6.9 percent to 3.96 billion pounds in the period ending 26 April. The company said this increase was largely thanks to a 34.9 percent jump in revenue in “premium lifestyle” from the acquisitions of brands like Jack Wills. However, it also was unsurprisingly negatively impacted by store closures during the period.

Revenue for the group’s UK Sports Retail section increased by 0.7 percent to 2.2 billion pounds. Excluding acquisitions, revenue fell 14.6 percent.

Revenue for its Premium Lifestyle segment increased by 34.9 percent to 722 million pounds. Excluding acquisitions, revenue increased by 18.6 percent, while like-for-like gross contribution was up 21.8 percent.

European Retail revenue was up 16.3 percent. Excluding acquisitions and on a currency neutral basis, revenue decreased by 15.6 percent. European Retail like-for-like gross contribution was down 12.7 percent.

The group reported EBITDA up 98.7 percent to 551 million pounds, though underlying EBITDA increased 5 percent to 302.1 million pounds.

Digital push

Looking forward, the company said it plans to invest in excess of 100 million pounds in its digital elevation strategy, with a particular focus on Flannels as it looks to continue the growth of its online business.

The company said it is now confident it will achieve between a 10 percent and 30 percent improvement in underlying EBITDA.

Chairman David Daly described it as the “most challenging year” in the company’s history. “The political uncertainty around Brexit had been with us for far too long and, just as we were feeling more confident of getting some clarity and stability, the Covid-19 crisis arrived which will continue to have an impact on the economy and our business beyond FY20.”

He continued: “Thankfully, as at the date of release of these financial statements, there is a semblance of normality returning with virtually all retail stores now fully open across the Group, albeit subject to strict social distancing measures. However the future, at least in the near term, is unclear as we and indeed the world come to terms with living under the threat of Covid-19 and what its short, medium and long term effects may be.

“There is currently a risk of a second wave which could lead to reinstatement of lockdown restrictions and there will be economic consequences which we do not yet fully understand.”

Photo credit: Sports Direct media centre


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