LONDON: Frasers Group plc (FRAS.L) announced increased full-year profitability for fiscal 2025 on Wednesday, driven by significant margin improvement and cost savings, even as group revenue declined. The British retail conglomerate, owner of Sports Direct and Flannels, also outlined ambitious international expansion plans.
For the 52 weeks ended April 27, 2025 (FY25), Frasers Group reported:
- Group Revenue: £4.93 billion ($6.36 billion), down 7.4% from £5.32 billion ($6.86 billion) in FY24.
- Adjusted Profit Before Tax (APBT): £560.2 million ($722 million), up 2.8% from £544.8 million ($702 million) in FY24. This metric excludes specific financial adjustments and the results of recently acquired XXL ASA.
- Group Gross Margin: Increased 150 basis points year-on-year to 46.8%.
- Retail Gross Margin: Increased 170 basis points to 45.6%.
Chief Executive Michael Murray attributed the record profit to the company’s “Elevation Strategy,” focusing on premium offerings and operational efficiency, despite headwinds from the previous year’s government budget. “We remain fully committed to our Elevation Strategy, which drove another record year of profitable growth,” Murray stated in the earnings release.
Revenue Performance by Segment:
- UK Sports Retail: Revenue fell 7.2% to £2.70 billion ($3.48 billion). Growth in the core Sports Direct brand was offset by planned reductions in lower-margin businesses like Game UK and Studio Retail. Segment trading profit rose 1.6% to £475.8 million ($613 million), aided by cost savings and the improved margin (up 180 bps to 48.2%).
- Premium Lifestyle: Revenue decreased 14.8% to £1.05 billion ($1.35 billion), primarily due to store portfolio optimization in House of Fraser and acquired JD Sports brands. Despite this, segment trading profit surged 14.7% to £157.4 million ($203 million), fueled by a 230 bps margin increase (to 39.4%) and cost reductions.
- International Retail: Revenue grew 1.3% to £1.01 billion ($1.30 billion), supported by the acquisition of Twinsport and underlying growth. Segment trading profit decreased by £13.1 million ($17 million) due to integration costs and inflation.
- Property: Revenue rose 19.1% to £86.6 million ($112 million), driven by acquisitions including Frenchgate (Doncaster), Princesshay (Exeter), and Affinity outlets.
- Financial Services: Revenue declined 23.2% to £85.3 million ($110 million) as the company prioritized its newer “Frasers Plus” credit platform over the legacy Studio Pay. Frasers Plus added 507,000 new customers and accounted for 12.2% of UK online sales. Its active customer base surpassed one million post-year-end.
Strategic Highlights & Cost Savings:
- Cost Synergies: The Group delivered £127.2 million ($164 million) in underlying cost savings and synergy benefits, largely from warehouse automation and integrating recent acquisitions.
- Inventory Reduction: Gross inventory decreased 15.0% (£224.7 million / $290 million), aided by efficiency gains.
- International Expansion: FY25 marked a “breakthrough year” for Sports Direct’s global ambitions. The company announced partnerships targeting hundreds of new stores in Australia/New Zealand (with Accent Group), Indonesia, India, Southeast Asia (via MAP Active), and the Gulf/Egypt (with GMG). Acquisitions included Twinsport (Netherlands), Holdsport (South Africa/Namibia), and XXL ASA (Scandinavia, post-period).
- Brand Relationships: Murray highlighted strengthened ties with key brands Nike, Adidas, and HUGO BOSS, noting his recent appointment to the HUGO BOSS supervisory board.
- Balance Sheet: Net assets grew to £1.99 billion ($2.57 billion). Net debt excluding securitization rose to £847.5 million ($1.09 billion), reflecting strategic investments. Post-period, the Group secured a new £3.0 billion ($3.87 billion) credit facility.
Outlook:
Frasers Group expects FY26 APBT in the range of £550 million to £600 million ($709 million to $774 million), excluding XXL ASA. This forecast factors in an estimated £50 million-plus ($64 million-plus) in incremental costs from the previous budget, which the company aims to mitigate through further cost savings, AI-driven efficiencies, and sustained robust margins.
“Longer term, we remain excited by the potential across the Group, especially for Sports Direct after our significant recent step up in international expansion, and for Frasers Plus,” the company stated, expressing confidence in delivering “multi-year, sustainable profitable growth.”