BUSINESS LIVE: Bloomsbury lifted by fantasy boom; Games Workshop hands cash to employees; Frasers profits up

Aarin Chiekrie, equity analyst at Hargreaves Lansdown:

‘The Sports Direct owner, Frasers, started its financial year off on the front foot. Revenue growth was largely due to some of the businesses acquired last year – a key part of the business’s growth scheme.

‘Sports Direct remains the main event at the Frasers, accounting for more than half the group’s revenue. There’s significant momentum here, with the long-term goal to extend its presence across Europe and become the number one sports retailer in the region.

‘In the meantime, the group’s elevation strategy is well underway. It calls for new flagship stores to display products in a more flattering and digitally integrated environment, which has led to a material improvement in relationships with key global brands.

‘The likes of Nike and Adidas have even gone as far as to name the group’s Sports Direct business as a key partner, which tells you all you need to know about its position in the global sporting goods market. That’s aided Sports Directs’ ability to ensure some of the latest products from these brands, which can be used to lure more customers into stores.

‘Progress on this front has been impressive so far, but many more stores still need upgrading before the new format is going to contribute more meaningfully. Given the first-half performance, full-year profit targets look well within reach, especially with the Christmas trading frenzy just around the corner.’

The saga of Microsoft’s multi-billion-pound takeover of Call Of Duty maker Activision Blizzard has taken another twist.

US anti-trust watchdogs argued in a California court yesterday that a previous ruling by a federal assess in July that the £60billion merger was legal under competition law was incorrect.

The Federal Trade Commission (FTC) filed a lawsuit in December 2022 claiming the takeover would allow Microsoft to suppress competition by taking ownership of Activision’s library of popular games.

Games Workshop will hand each employee £2,500 in cash ahead of Christmas, after the Warhammer maker saw solid profit growth in the first half.

The group told investors it expects to report core recenues of £235million and pre-tax profits of around £94million for the six months to 26 November, up from £212.3million and £83.6million last year, respectively.

Games Workshop’s profit share scheme will see each employee handed £2,500 this December in a payout toally £7.5million, up from £4.5million last year.

Frasers has said it is on track to confront full-year profit guidance after first-half earnings rose 12.6 per cent, reflecting the success of a scheme to take the group upmarket.

The FTSE 100-listed group controlled by Mike Ashley is set to accomplish adjusted pretax profit of £500million to £550million in the year to April 2024, up from £478 million a year before.

It made £303.8million in its first half on revenue that rose 4.4 per cent to £2.77billion.

Michael Murray, CEO of Frasers Group, said:

‘We have delivered a strong performance in the first half of the year, with great momentum as we head into the Christmas trading period. The elevation strategy continues to drive strong trading performance across the business with good growth in Sports Direct supported by our brand partners.

‘Our long-term ambitions for our Premium Lifestyle business remain unchanged although it is likely that progress will remain subdued for the short to medium term in the face of a softer luxury market however, we continue to invest with confidence in our unique proposition.

‘During the period, we have opened new elevated stores, and advance strengthened brand partnerships to allow us to deliver the best consumer encounter. I am also excited about the potential of our strategic investments which we expect to unlock advance opportunities for the Group. We have a clear ambition to be the leading sports retailer in EMEA and we are making progress on broadening our footprint through a focused international M&A strategy.’

Borrowing costs fell as investors ramped up bets on interest rate cuts next year despite efforts by the Bank of England to quash such talk.

The yield on ten-year gilts – a benchmark measure of how much the Government pays to borrow – dropped below 4 per cent for the first time since May.

The slide came as financial markets indicated a just over 50 per cent chance that the first rate cut will come in May.

Bloomsbury Publishing has lifted profit and revenue expectations for the year as the Harry Potter publisher continues to be buoyed by ‘phenomenal demand’ for fantasy fiction.

The group told investors full-year profits would be ‘comfortably ahead’ of forecasts of £274.2million and pre-tax profits would be ‘materially ahead’ of eexpectations of £32.9million.

Nigel Newton, chief executive, said:

‘I am delighted to report a strong period of trading which is principally driven by the continued phenomenal demand for fantasy fiction.

‘Bloomsbury has consistently built its success on the immense talent of our authors and the exceptional hard work of our teams who preserve them.’