Frasers Group reported that profits at its UK Sports segment rose 17.6 percent in its fiscal year ended April 26 as higher gross margins tied to Sports Direct’s Elevation Strategy and reduced expenses offset sales declines due to store rationalization at its Game UK chain and restrained consumer spending. The retailer warned that consumer spending will likely remain challenging this year. 

Frasers Group didn’t provide guidance for the current year due to uncertainties created by its takeover bid for Hugo Boss. 

“The Elevation Strategy is going from strength to strength, with positive momentum from brand partners and strong feedback from consumers validating our strategy and giving us the confidence to continue to execute with ambition and conviction,” said Michael Murray, CEO of Frasers Group, in a press release. “However, we continued to feel the impact of tough trading conditions, subdued consumer confidence and industry-wide excess inventory levels through Half 2 and into the start of FY27. 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. Despite these external factors, the Group remains focused, resilient, and will continue to invest in opportunities that support sustainable, profitable growth.”  

Summary of Results 

  • APBT (adjusted profit before taxes) decreased by 4.0 percent in the year to £538.0 million, as a £259.5 million increase in impairments of tangible and intangible fixed assets, £34.7 million of impairments of investments in associates, and a £37.5 million increase in net bank interest costs were partially offset by a £33.8 million gain from the disposal of the Coventry Arena, a £117.7 million increase in premiums from strategic investments, £34.0 million of extra provision releases year-on-year, and a £51.6 million increase in share of profit from associates.
  • The current period result includes impairment charges totalling £249.9 million (FY25: £9.6 million impairment reversal), which primarily relate to intangible assets. The Group has fully impaired the intangible assets and goodwill assigned to the XXL, Everlast and Twinsport cash-generating units, and partly impaired the goodwill relating to the Holdsport business, due to forecast future performance not being sufficient to support their carrying values. In addition, the Matches intellectual property was fully impaired (£18.0 million) and a £17.9 million property impairment (FY25: £9.6 million impairment reversal) was also recognised, largely relating to a single under-performing store in the UK.
  • Share of profit of associates includes £53.6 million in respect of Hugo Boss, Accent Group and Four (Holdings) Limited, offset by the write-off of the carrying value of investments in Kangol LLC (£16.9 million), Hudson Holdings (£16.9 million), and X Channel Marketing Ltd (£0.9 million).
  • Reported PBT (profit before taxes) was £527.8 million, an increase of 38.9 percent. The year-on-year increase in reported PBT is largely due to the non-repeat fair value losses on equity derivatives held in relation to strategic investments. The £141.6 million fair value loss in the prior period was the result of sharp falls in the share prices of companies in which the Group was invested (particularly Hugo Boss) in April 2025 as result of tariffs proposed by the US government. In addition, the Group’s holdings in Hugo Boss and Accent Group are no longer held at fair value as they are now accounted for as associates.
  • Retail revenue increased by 8.3 percent to £5,149.5 million. In the UK, sales growth from Flannels, reflecting the ongoing success of the Elevation Strategy and green shoots in the luxury market, was more than offset by planned declines in Game UK standalone stores, Studio Retail, House of Fraser, and the businesses acquired from JD Sports. International revenue benefited from the acquisitions of Holdsport (completed in May 2025) and XXL (completed in June 2025), partially offset by the disposal of the MySale business in May 2025.
  • Group gross margin percent increased to 48.4 percent from 46.8 percent due to an improved mix effect, as the lower margin percent businesses reduce as a proportion of total revenue, and the higher margin Sports Direct and Flannels businesses continue to grow as a proportion of group sales. Flannels has increased its gross margin percent through a more relevant product offering and improved inventory holding and there was also an underlying improvement in Sports Direct’s gross margin.
  • Basic EPS of 86.7 pence, an increase of 19.2 pence (28.4 percent) year-on-year, reflecting the increase in reported PBT partially offset by an increase in effective tax rate. Adjusted EPS of 83.3 pence decreased by 14.8 pence (15.1 percent), reflecting the reduction in APBT and the increase in effective tax rate, largely due to the tax impact of significant goodwill impairments.
  • The Group’s strategy continues to be underpinned by a strong balance sheet with net assets increasing to £2,452.7 million from £1,988.1 million at April 2025, due to the Group’s profitability in FY26 and fair value gains in respect of the Group’s strategic investments, partially offset by share buybacks.
  • Cash inflow from operating activities before working capital movements of £946.4 million has enabled the Group to continue to invest in its retail proposition, international acquisitions, Frasers Plus, its property portfolio and strategic partnerships such as Hugo Boss and Accent Group. Frasers’ holding in Hugo Boss increased to 25.0 percent in FY26 and to 26.1 percent post year-end, while the investment in Accent Group increased to 22.9 percent.

Review by Business Segment | UK Sports

  • Revenue in the segment, which largely consists of Sports Direct, decreased by 4.7 percent, largely driven by planned declines in standalone stores of Game UK, a video game retailer, and declines at Studio Retail, a digital home shopping retailer and consumer credit provider. The segment also includes Frasers’ fitness operations, including Everlast Gyms and WIT Fitness; its UK-based wholesale and licensing segment, which includes brands such as Slazenger, Everlast, Lonsdale, Karrimor and No Fear; and Evans Cycles.
  • Gross profit increased 290 basis points to 51.1 percent, reflecting the fact that the higher margin Sports Direct business now makes up a greater proportion of this segment and benefited from better product access due to the Elevation Strategy, as well the benefits of more efficient inventory management.
  • Operating costs reduced by £69.0 million as the benefits of integrating and right-sizing the lower margin businesses were realised. The current year result also benefits from a reduction in legal and regulatory provisions as a result of several cases coming to, or nearing completion. The savings were offset by increases to National Minimum Wage and Employers’ National Insurance, however.
  • As a result, the segment’s profit from trading increased 17.6 percent to £559.4 million.
  • UK Sports’ operating profit reached £387.1 million, up 5.9 percent from £365.5 million a year ago. Operating profits include net impairments of £15.9 million (FY25: net impairment reversals £5.0 million), depreciation and amortisation of £131.8 million (FY25: £134.3 million) and realised foreign exchange losses of £19.0 million  (FY25: gains £19.8 million).
  • Store numbers increased from 785 to 794, mainly driven by growth from Sports Direct and an increase in concessions in larger stores.

Premium Lifestyle

  • Revenue decreased by 6.9 percent as growth in Flannels was more than offset by the impact of continuing to optimise its store portfolio in House of Fraser, the businesses acquired from JD Sports and Jack Wills. The segment includes Frasers’ premium and luxury retail businesses Flannels, Cruise, Van Mildert, Jack Wills, House of Fraser & Frasers, Gieves and Hawkes, and Sofa.com along with the related websites.
  • Gross profit was broadly flat at £412.7 million, as the negative impact of the revenue decline was negated by a +290 basis point increase in gross margin percent from 39.4 percent to 42.3 percent (the result of an improving mix effect with Flannels increasing its proportion of group sales and through a more relevant product offering).
  • Profit from trading reduced by £9.8 million to £147.6 million, with the gross profit performance and continued operating cost discipline outweighed by a £9.7 million increase in operating costs largely driven by increases to National Minimum Wage and Employers’ National Insurance.
  • Premium Lifestyle’s operating profit of £102.1 million (FY25: £131.9 million) includes net impairments of £17.3 million (FY25: reversals £1.8 million) and depreciation and amortisation of £28.2 million (FY25: £27.2 million).
  • Store numbers decreased from 156 to 133 as Frasers continued to optimise the segment’s store portfolio in House of Fraser, the businesses acquired from JD Sports, and Jack Wills.

International

  • International revenue benefited from the acquisitions of Holdsport (completed in May 2025) and XXL (completed in June 2025), partially offset by the disposal of the MySale business in May 2025. This resulted in revenue growth of 59.2 percent year-on-year. The segment includes Frasers’ sports retail stores, management and operating functions in Europe, Asia and the rest of the world, including the Group’s European Distribution Centres in Belgium and Austria, Twinsport in the Netherlands, the Baltics & Asia e-commerce offerings, XXL in the Nordics, Holdsport in South Africa and all non-UK based wholesale and licensing activities (relating to brands such as Everlast and Slazenger).
  • Segment profit from trading increased by £91.4 million to £205.5 million. Gross profit increased by £246.9 million, driven by acquisitions, partly offset by a 130 basis point decline in gross margin percentage reflecting the lower-margin profile of the XXL and Holdsport businesses.  
  • International recorded an operating loss of £152.2 million (FY25: operating profit £38.1 million). This is largely driven by £216.7 million of impairments (FY25: £1.8 million), of which £152.4 million relates to the full impairment of goodwill arising on the XXL acquisition (the increase in value between acquisition and year-end was due to foreign exchange movements), £20.8 million relates to the full impairment of Twinsport goodwill, and £27.4 million to the partial impairment of goodwill arising on Holdsport. It also includes depreciation and amortisation of £136.1 million (FY25: £69.3 million) and realised foreign exchange losses of £6.0 million (FY25: gains £4.9 million).
  • Store numbers increased from 373 to 565 due to the acquisitions of XXL and Holdsport.

Michael Murray, CEO, provided a business update:

“Delivering on our priorities
We continued to invest with conviction and deliver against our Elevation Strategy, laying the foundations for sustainable, profitable growth. While macroeconomic challenges, consumer sentiment and geopolitical headwinds unfortunately slow progress, encouraging feedback from brand partners and customers reinforces our confidence in this strategy and our commitment to continue investing. We remain focused on the growth opportunities being created across the Group through a stronger product and brand mix at Sports Direct and accelerating international expansion, positive signs of recovery at FLANNELS, our unrivalled property portfolio and the continued momentum of Frasers Plus. Despite this, there is further work and investment to be done to achieve the Group’s full potential and create sustainable long-term value.

1 – Continue to invest in key areas of Elevation Strategy
The Elevation Strategy is working, demonstrated by our retail performance this financial year. Retail remains central to Frasers Group as we continue to invest in UK Sport, enhancing our store portfolio and investing in high streets to deliver the world’s best sport brands and an improved product portfolio to consumers. We opened a state-of-the-art 90,000 sq. ft flagship Sports Direct & Everlast Gyms+ in Liverpool, redefining retail and offering a 360-degree sport, lifestyle, fitness and wellness experience. This summer, we will take our flagship concept to Dublin, opening a first-of-its-kind integrated retail and fitness destination in the Irish market. Our partnerships with leading global brands including Nike, adidas and HUGO BOSS continue to strengthen, reflecting the scale and relevance of our proposition. After period-end, we launched HOKA in Sports Direct, complementing our roster of the world’s top global running brands.

  • In Premium Lifestyle, we continue to bring luxury and premium brands to the regions through FLANNELS and FRASERS, with the addition of new brands including SKIMS and Dior, which highlight the breadth of our offering. With the FLANNELS estate now near complete, our stores serve as a platform for luxury brands to reach consumers across the nation and we are encouraged by the positive signs we’re seeing in this sector.
  • We have made progress elevating our top five own brands – Everlast, Slazenger, Karrimor, Jack Wills, USA Pro – this year, and a big opportunity remains in future to leverage this brand heritage to drive further growth and margin opportunities. Supporting this strategy, our investment into Everlast Gyms and Slazenger Padel Clubs continues to build relevance for these heritage brands and we’re seeing positive member growth across both concepts as we deliver best-in-class fitness destinations.
  • We enhanced our omnichannel proposition and customer experience, launching the FRASERS AI Agent and increasing the use of AI to drive greater personalisation for customers. Through ELEVATE, our retail media proposition, we continue to deliver hyper-personalised advertising across physical and digital channels, creating greater value for brand partners.

2 – Execute and grow international opportunities

  • Leveraging the strength of our UK Sport business and brand relationships, international expansion has become a powerful growth engine for the Group and a key pillar of our long-term strategy. Strategic acquisitions of Holdsport, XXL, and (after period-end) Hervis’ Romania and Hungary retail operations, alongside our global partnerships, enabled a number of key milestones this year – opening Sport Direct stores for the first time in Malta, Australia, the Philippines and the Middle East.
  • Following the acquisition of XXL, we are encouraged by the brand’s progress and although there is still much work to do, we expect to return the business to profitability in future. The opening of the first Sports Direct flagship in Helsinki after period-end positions the Group well to deliver improved product availability, better value and a more compelling in-store experience for customers across the Nordics. After period-end, we sold 100% of Sports Direct Malaysia to our trusted partner in the region, Map Active, furthering our Southeast Asian market strategy to unlock efficiencies and streamline operations in the region. We are making solid progress against our ambitious global growth plans for Sports Direct while recognising that significant opportunities remain as we continue to execute this strategy in FY27.

3 – Focus on property investment and opportunities for value creation
Our property strategy remains a key pillar of the Elevation Strategy, with over 225 properties in our portfolio at year-end and a strong ambition to continue investing in destinations that deliver long-term value. Milestone acquisitions included Braehead and Swindon, as well as York and East Midlands outlets after period-end. Our strategic focus on outlet acquisitions highlights the Group’s unique position as a landlord and retailer, leveraging our strong partnerships with global brands to unlock mutual value. We renamed several of the outlets and shopping centres in our portfolio under the Frasers Plus banner, creating a cohesive offering for shoppers which will include expanded benefits for Frasers Plus users.

4 – Frasers Plus growth
Frasers Plus is playing an increasingly important role in deepening customer engagement and loyalty across the Group. Two years since we launched the proposition, we are well on track to achieve our long-term ambitions of delivering £1bn+ in sales, £600m in credit balances, a greater than 15% yield, and over 2 million active Frasers Plus customers. Frasers Group Financial Services and Visa have partnered to launch a new UK credit and payments solution in FY27, enabling customers to make seamless contactless mobile payments while combining loyalty rewards across Frasers Group brands and anywhere Visa is accepted.

Our Teams
Our success starts with our people. From head office to the warehouse and shop floor, our team of over 30,000 employees globally are the driving force behind everything we do. I would like to thank all our colleagues for their continued hard work, dedication and contribution throughout the year.

Looking Forward
For FY27, our strategic priorities provide a strong framework for long-term value creation. We will continue to deliver against the Elevation Strategy and invest in the growth opportunities identified above to deliver sustainable profitable growth.”

Outlook
Frasers said, “The Group’s strategic ambitions remain unchanged, including our continued international expansion. We recently launched a voluntary public takeover offer for Hugo Boss and an on-market takeover offer for Accent Group. As these transactions remain ongoing and may, depending on the level and timing of acceptances, lead to a variety of outcomes, the Board considers that it is not appropriate to provide financial guidance for FY27 at this time. We will review the position at half year as appropriate.”

Image courtesy Sports Direct