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Frasers Group, the British sportswear and apparel retailer that owns the Sports Direct brand, reported a 13.1% rise in annual profit and forecast further strong growth in its new financial year, saying its plan to diversify and move upmarket is working.
Shares in the company were up 8% on Thursday after it forecast profit growth for its 2024/25 year of up to 15%.
The group, controlled by founder Mike Ashley, is pursuing what it calls an "elevation strategy" under chief executive Michael Murray, Mr Ashley's son-in-law, with investments in flagship stores, in automation and in online operations, and the strengthening of ties with brands such as Nike, Adidas, and The North Face.
"Our brand relationships are in the best place they've ever been," the company’s finance chief Chris Wootton told Reuters. "At the same time, we still have a very credible and strong own-brand business which complements the third-party brands."
In recent years, Frasers has diversified from sports retail into premium and luxury retail, expanded internationally and created a property investment and financial services division.
The group's brands also include House of Fraser, Flannels, USC and Jack Wills, and it holds strategic equity stakes in a raft of other retailers including Hugo Boss, ASOS, Boohoo, Currys and AO World.
Revenue from the company's premium lifestyle brands fell by just over 1% in its last year, amid a wider decline in the luxury retail sector which has hit a number of brands.
Frasers made an adjusted pre-tax profit of £544.8m (€659m) in the year to April 28 — at the top end of its guidance range of £500m and £550m and up from £478m made in 2022/23. Revenue was £5.54bn.
It forecast profit of between £575m and £625m for its new financial year — a year that has the Euro 2024 soccer championship behind it and the Paris Olympics coming up.
Mr Wootton declined to comment on whether Frasers would be interested in bidding for luxury brand Burberry, which warned on profit on Monday and has a smaller market value than Frasers.
Luxury brands across Europe have been struggling in recent weeks. Hugo Boss revised down its profit guidance for the year on the back of weak China sales while Cartier-owner Richemont also noted there has been a decline in the country, falling 27% over the last three months.