Frasers Group PLC (LON:FRAS)’s full year organic revenue rose 31.2% to £4.7bn, excluding the impact of exchange rates. This reflected the reopening of stores, which drove growth across all segments bar Rest of World Retail.
Profit before tax was up from £8.5m to £366.1m, driven by improved revenue, new FLANNELS stores and growth online in premium lifestyle. This offset a £227m charge relating to the reduction in value of property assets. It also excludes the cost of the Studio Retail Limited acquisition, which is expected to reduce profits before tax by £5-£10m.
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The group expects full year underlying profit before tax between £450m and £500m.
Shares were up 8.0% following the announcement.
Frasers's Earnings
Laura Hoy, Equity Analyst at Hargreaves Lansdown:
“Frasers is betting big on a return to in-person shopping, with what CEO Michael Murry dubbed to be a ‘conservative’ forecast for underlying profit growth of 30% or more. He’d have been forgiven for treading lightly given the inflationary cost pressures, cost of living crisis and ongoing structural decline of department stores. But instead the bold move suggests the group’s doubling down on its efforts to bring back the allure of physical shopping experiences.
It’s difficult to map out how much of the rosy results came from easier comparisons as the group was lapping extraordinary weakness from covid-lockdowns. But there were some promising signs including efficiency improvements and the expansion of higher-margin parts of the business.
Only time will tell whether Murry’s optimism is grounded in reality—we question whether omnichannel experiences are enough to lure shoppers back into stores. And Frasers’ stable of brands is at risk of being squeezed by the cost of living crisis. Still we can’t knock progress and given the valuation’s come down considerably, many of these concerns are being priced in.“
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