The new expected FY25 figure of between £550m ($699.77m) and £600m is slightly below its previously provided guidance of between £575m and £625m.
The retailer posted profit before tax of £207.2m for the first half of fiscal year 2025, marking a 33.2% reduction compared to £310.2m during the same period in the previous fiscal year.
This downturn is attributed to reduced foreign exchange gains and adverse non-cash fair value movements on equity derivatives, especially due to the substantial fall in Hugo Boss share price.
FY25 H1 operational performance highlights
The company's adjusted profit before tax also experienced a marginal decline of 1.5% to £299.2m, despite the absence of a prior year's one-time gain of £20.0m from the sale of Missguided's intellectual property and additional costs linked to the introduction of Frasers Plus, its new subscription-based membership offering.
In the 26-week period concluding on 27 October 2024, the group’s retail revenue fell by 8.4% to £2.45bn. Growth in Sports Direct sales was overshadowed by deliberate reductions in Game UK, Studio Retail, acquisitions from JD Sports, and SportMaster operations, as well as a difficult luxury market environment.
The UK Sports division, comprising 54.0% of total group revenue, saw a revenue decrease of 7.6%. Despite this drop in sales leading to a £35.8m dip in gross profit for this segment, gross margin percentage rose by 100 basis points (bps) to 45.4%, reflecting an increased proportion of higher-margin Sports Direct business.
Revenue from Premium Lifestyle, representing 18.6% of total group revenue, declined by 14.1% amid ongoing efforts to streamline store portfolios within House of Fraser and businesses acquired from JD Sports.
International Retail, accounting for 24.1% of group revenue, reported a revenue decrease of 5.3%. Expansion in Sports Direct International was negated by declines in Game Spain and Sportmaster revenues.
The group’s basic earnings per share (EPS) fell to 35.9p, down by 17.1p year-over-year, while adjusted earnings per share decreased by 2.7p (5.0%) to 51.0p.
Group profit from trading receded by 2.9% to £400.6m from £412.5m last year.
An enhanced gross margin percentage at 43.4%, up from 43%, was realised due to an advantageous mix effect with lower-margin businesses constituting a smaller portion of total revenue and higher-margin Sports Direct gaining prominence.
Frasers Group chief executive Michael Murray said: “We continue to operate with discipline to ensure our business is as resilient as possible - proactively right-sizing recent acquisitions to set them up for profitable long-term growth and driving further automation benefits to exceed our stock reduction targets for the period.”
Outlook for 2025
Despite current challenges in consumer confidence and trading conditions exacerbated post the UK budget announcement, Frasers Group remains optimistic about achieving sustainable profitable growth over multiple years and anticipates further progress in FY25.
Looking beyond into FY26, the company anticipates facing at least £50m in additional costs due to recent budget changes but is actively seeking cost mitigation strategies to sustain its growth trajectory.
“We are set to deliver another year of profitable growth but, given recent weaker consumer confidence leading up to and following the Budget, FY25 APBT is now expected to be in the range of £550m to £600m," Michael Murray added.
Frasers Group recently expanded its presence in South Africa and Namibia's sports and outdoor retail market by finalising a deal to purchase South African retailer Holdsport.
Frasers Group has also been involved in a dispute with UK retailer Boohoo, urging the appointment of its own representatives Mike Ashley and insolvency specialist Mike Lennon, as directors.
