Frasers Group lowers FY guidance on Budget measures, weak trading

(Sharecast News) - UK sportswear and fashion retailer Frasers Group lowered full-year profit forecasts, citing weaker consumer confidence leading up to and after the government's recent Budget and a tougher trading environment. The Sports Direct owner now expects adjusted pre-tax profit for the 2024/25 fiscal year of £550m-600m compared to prior guidance of £575m-625m. Interim profits were down 1.5% to £299.1m on the same basis.

Revenue fell to £2.49bn from £2.7bn in the six months to October 27.

Frasers, which is controlled by majority shareholder and founder Mike Ashley, said recent Budget measures including a rise in the minimum wage and employer national insurance contributions, would cost an extra £50m for the full-year.

"We are working hard to mitigate these in order to maintain our profitable growth ambitions," the company said.

In the group's UK sports segment, which makes up 54% of total group revenue, revenue decreased by 7.6% to £1.37bn. Continued sales growth from Sports Direct reflected ongoing success of Frasers 'Elevation Strategy' and strengthening brand relationships, but this was more than offset by planned declines in Game UK, Studio Retail and Sportsmaster in Denmark, while a "challenging luxury market" also dragged on sales.

Frasers said it was now "right-sizing" those previously unprofitable firms to put them on a more sustainable footing.

Reporting by Frank Prenesti for Sharecast.com