Frasers Group’s focus on premium lifestyle proves to be the right move

Following today’s release of Frasers Group FY figures for 2019/20, Emily Salter, Retail Analyst at GlobalData, a leading data and analytics company, comments:

“Following last year’s shambolic results debacle, this has been another chaotic situation for the Frasers Group with the release date being pushed back a week and non-executive chair David Daly buying shares on Monday during a closed period “in error”. Group sales were significantly boosted by the acquisition of a smorgasbord of players including GAME, Jack Wills and Sofa.com, but l-f-l revenue declined more significantly versus last year as COVID-19 forced stores to close for the last month of the period (though Ashley initially tried to keep Sports Direct stores open as an essential retailer). Despite declining profit before tax, the group’s share price rose by over 15% this morning.

“Performance of the group’s sports fascias was bolstered by soaring demand for home gym equipment, athleisure and bikes during lockdown, but revenue still fell by 14.6% excluding acquisitions due to temporary store closures, with Sports Direct’s poor online proposition not enough to offset this decline in physical sales. The growing focus for the business is the premium lifestyle division, which now makes up 18.2% of total revenue (14.5% in FY2018/19) as the group recognises the struggles of operating in the increasingly squeezed midmarket. Premium lifestyle growth excluding acquisitions was still strong at 18.6% as it opened new stores during the year, including Flannels’ flagship Oxford Street location which finally opened in September.

“Frasers Group will invest over £100m in a ‘digital elevation strategy’ to improve the online shopping experience, a wise move given the accelerated shift to online spending due to COVID-19, which would also offer greater sales protection in the case of a second nationwide lockdown. After Ashley’s acquisition spree in the past few years, the Group did not give any indication whether this would continue amid rumours of a bid for DW Sports, as well as reports that the group could take up to 30 Debenhams sites in the case of store closures. This could provide a significant opportunity to create a multi-fascia store housing key brands Flannels, Sports Direct, Evans and GAME, as all 30 would be too many sites for Flannels alone, but a more premium fascia would be more appropriate in many locations such as Watford and the Birmingham Bullring.”

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