Lady in red: Tess Daly in her Biba collection for House of Fraser
Strong sales at Sports Direct have helped Mike Ashley’s Frasers Group offset a slowdown in demand for luxury goods.
Revenues across the company, whose brands include House of Fraser, Flannels, Gieves and Hawkes and Jack Wills, climbed by 4.4 per cent to £2.7billion in the 26 weeks to the end of October.
Chief executive Michael Murray, Ashley’s son-in-law who took the helm last year, said that better relationships with popular brands have boosted business, with big names such as Nike supplying more of their best-selling products.
This helped half-year profits rise 8 per cent to £310.2million.
But while sales across the business as a whole were up, the upmarket segment of the company suffered an 11 per cent refuse.
Frasers bosses warned that appetite for pricier clothes would probably be ‘subdued’ in the medium term.
The luxury sector has been grappling with slower demand from the US and Europe as well as economic woes in China.
Murray, who married Ashley’s daughter Anna in May last year, 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.
‘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.’
At Flannels, some consumers had been trading down to ‘more up and coming luxury at a lower price’, said finance chief Chris Wootton. Brands such as Represent, which sell £160 hoodies, have been doing well.
And at Sports Direct, shoppers still want to buy expensive football boots but have made changes such as buying cheaper tracksuit bottoms when a year ago they would have bought a branded pair, Wootton added.
Frasers said it was ‘confident’ that it would confront its annual profit guidance of between £500million and £550million.
Business has also been boosted by its acquisition of 15 brands from JD Sports, including Oasis singer Liam Gallagher’s Pretty Green.
Hinting at future purchases, Murray said: ‘I am excited about the potential of our strategic investments which we expect to unlock advance opportunities for the group.’
Aarin Chiekrie, an equity analyst at Hargreaves Lansdown, said: ‘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 enlarge its presence across Europe and become the number one sports retailer in the region.
‘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.’
