Frasers to report annual profit after year of acquisition-fuelled growth

Mike Ashley’s high street conglomerate has bought a string of companies in the last year.

Sports Direct and House of Fraser owner Mike Ashley (Lucy North/PA) (PA Wire)

Mike Ashley’s retail empire Frasers is set to announce as much as £550 million in underlying profit next week, as the retail giant reports its full-year results.

The London-listed company, which owns the Sports Direct and House of Fraser retail brands, will announce its earnings for the year ending April 30 on Thursday.

It has given pre-tax underlying profit guidance of between £500 million and £550 million.

Underlying pre-tax profit guidance of £500-£550 million looks achievable when full-year results are announced next week

Aarin Chiekrie, Hargreaves Lansdown

Last year, operating profit was £531 million.

Much of Frasers’ profit will hinge on the success of Sports Direct, which made up more than half of its revenue at its half-year results.

Statutory profit could be significantly lower, however, after a string of acquisitions including the ill-fated buyout of Matchesfashion.

Frasers bought the struggling retailer for £52 million in December, amid plans to turn the company around.

However, three months later it put Matchesfashion into administration, saying the brand had “consistently missed its business plan targets” despite support from the group.

Separately, Mr Ashley’s company was also reported to be closing in on a deal to become the new British partner of Ted Baker in May, signalling that his high street buying spree is to continue.

Aarin Chiekrie, equity analyst at Hargreaves Lansdown, said: “Frasers’ recent growth has largely been fuelled by acquisitions of other brands.

“Despite this, Sports Direct remains the main event, accounting for more than half of the group’s £2.8 billion revenue over the first six months of the year.

“The group’s working hard to elevate its brand status in consumers’ minds by building new flagship stores and displaying products in a more flattering environment.

“Analysts have been impressed by early signs at these new stores, but a lot more need upgrading if the new format is to contribute meaningfully.

“Increased automation at warehouses is set to improve efficiencies, cash flows and profitability moving forward.

“As a result, underlying pre-tax profit guidance of £500-£550 million looks achievable when full-year results are announced next week.”