Frasers Group has withheld its profit guidance for the year ahead as its multibillion-pound pursuit of Hugo Boss and Accent Group creates uncertainty over its financial outlook.
The Sports Direct and Flannels owner said the potential timing and level of acceptances for its two takeover offers could produce “a variety of outcomes”, making it inappropriate to issue guidance for its 2027 financial year. It expects to reassess the position at its half-year results.
The decision came as Frasers revealed adjusted pre-tax profit slipped four per cent to £538m in the year to 26 April, falling below its own £550m to £600m forecast and analysts’ expectations of £564.2m.
However, reported pre-tax profit jumped 38.9 per cent to £527.8m, while group revenue climbed 8.7 per cent to £5.33bn, driven by a 59.2 per cent surge in international sales following its acquisitions of Holdsport and XXL.
Frasers’ underlying result was hit by £249.9m of impairment charges, including writedowns linked to XXL, Everlast, Twinsport and Holdsport. It also wrote off the remaining £18m value of the intellectual property acquired from collapsed luxury retailer Matches.
UK Sports sales fell 4.7 per cent to £2.57bn, while revenue across its Premium Lifestyle division, which includes Flannels and House of Fraser, dropped 6.9 per cent to £975.7m.
Despite the sales declines, Frasers said Flannels had returned to growth as demand showed early signs of recovery in the luxury market. Retail profit from trading rose 22.1 per cent to £912.5m, while group gross margin improved 1.6 percentage points to 48.4 per cent.
Chief executive Michael Murray said Frasers continued to face tough trading conditions, weak consumer confidence and excess stock across the retail sector.
“These pressures are weighing on the entire sector, creating a prolonged and challenging environment, meaning the full potential of this progress has not yet been realised,” he said.
Frasers has offered €38 a share for the remaining shares in Hugo Boss, in which it owns a 26.1 per cent stake. However, the German fashion house has urged investors to reject the bid, describing it as financially inadequate.
The group has also launched a A$0.65-a-share offer for Australian footwear retailer Accent Group, where it owns 22.9 per cent. An independent committee of Accent directors has similarly recommended that shareholders reject the approach.
Frasers’ net debt excluding securitisation rose from £847.5m to £1.17bn as it continued investing in acquisitions, properties and strategic stakes.
The retailer nevertheless pointed to growing momentum at its Frasers Plus credit operation, which generated £340m of sales and ended the year with 1.1 million active customers.
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