U.K.-based Frasers Group, the parent of Sports Direct, Everlast, and Evans Cycles, among many others, reported a 7.4 percent decline in sales for its fiscal year ended April 27, as continued sales growth from Sports Direct was offset by moves to right-size other sports banners and weakness in its luxury segment, including House of Fraser. Earnings for the year came in at the low end of guidance, and Frasers gave a cautious outlook for the current year.
Adjusted profit before tax (APBT) in the fiscal year increased 2.8 percent to £560.2 million, up from £544.8 million a year ago. Frasers, which also owns a number of sports brands including Slazenger, Donnay, LA Gear, No Fear, and Antigua, said a 1.5 percent decline in APBT in its first half was offset by an 8.3 percent improvement in the second half.
However, APBT remained towards the lower end of the £550 million to £600 million guidance range provided when it reported its first-half results in December.
Frasers had lowered its forecast in December when it reported first-half results, blaming the UK government’s tax-hiking Autumn Budget for dampening consumer confidence. For the current fiscal year, Frasers predicted APBT in the range of £550 million to £600 million as works to offset £50 million in extra costs due to changes outlined in last year’s Autumn Budget.
The company said the 2.8 percent improvement in APBT came despite the non-recurrence of the £25.0 million gain on disposal of the Missguided intellectual property in FY24, an £11.8 million loss on disposal of Game Spain, and a £40.1 million reduction in profit from trading in the Financial Services segment, due to a decision to wind down the Studio Pay receivables portfolio and focus on Frasers Plus, an approach which reduces revenue and increases impairment charges in the near-term.
Sales in the fiscal year fell to £4,753.7 million from £5,133.3 million a year ago. Continued sales growth from Sports Direct, reflecting the ongoing success of its Elevation Strategy and strengthening brand relationships, and the acquisition of Twinsport was more than offset by planned declines in Game UK, Studio Retail, the companies acquired from JD Sports and SportMaster in Denmark “as these previously unprofitable businesses were right-sized and put on a more sustainable footing,” according to Frasers.. In addition, Frasers said the luxury market “continued to be challenging, although it is now showing some early signs of improvement.”
Group gross margin in the year increased 150 basis points to 46.8 percent as the higher margin Sports Direct and Flannels businesses increased their share of the mix with the planned reductions at lower margin businesses.
Management Commentary
Michael Murray, CEO of Frasers Group said he was pleased with the company’s performance this year, despite the headwinds caused by last year’s Budget, referring the the country’s Budget of His Majesty’s Government set each year by HM Treasury for the following financial year.
“We remain fully committed to our Elevation Strategy, which drove another record year of profitable growth and further delivery of our key priorities,” Murray said. “We continued our strategy of confidently investing for the future, unlocking multiple opportunities for sustainable medium- to long-term growth. We accelerated our international expansion, announcing partnerships in Australia, Asia and EMEA, to further build Sports Direct into a truly worldwide proposition.”
He said relationships with the world’s best global brands, including Nike, Adidas and Hugo Boss, are the strongest they have ever been, noting that the company’s ambitious growth plans are now strengthening and scaling these partnerships even further.
“We captured over £125 million of synergies through strategic acquisition integrations and cost savings, and continued to invest in real estate opportunities that deliver great value for the Group. Frasers Plus is going from strength to strength and is on track to meet its long-term ambitions. Delivering on all of these priorities demonstrates disciplined execution business-wide, but there is still more important work to be done.”
For fiscal 2026 to-date, Murray said the company is seeing positive momentum across the Group, including strong performance at Sports Direct.
“We have big ambitions to continue to raise the bar,” he said. “We are working hard to mitigate the £50 million-plus of extra costs caused by last year’s Budget, and we are currently expecting FY26 APBT in the range £ 550 million to £ 600 million. Looking further forward, we remain confident in our strategy and our plans to deliver multi-year, sustainable, profitable growth. Thank you to our teams for their continued hard work and dedication.”
Segment Summaries
UK Sports Retail
UK Sports’ revenue decreased by 7.2 percent in the fiscal year to £2,698.1 million. Continued sales growth from Sports Direct, reflecting the ongoing success of the Elevation Strategy and strengthening brand relationships, was more than offset by planned declines in Game UK and Studio Retail.
Gross profit decreased by £50.8 million as a result of the sales decline; however, the gross margin increased 180 basis points to 48.2 percent, reflecting the fact that the higher-margin Sports Direct business now makes up a greater proportion of this segment. Operating costs were reduced by £58.2 million as the benefits of integrating and right-sizing the lower-margin businesses were realized. This contributed to a 1.6 percent increase in the segment’s profit from trading, to £475.8 million.
UK Sports’ operating profits reached £365.5 million, up from £353.1 million a year ago, and included impairment reversals of £5.0 million (FY24: impairment reversals of £8.4 million).
UK Sports Retail’s store count decreased from 797 doors to 785 doors over the year, mainly driven by the replacement of standalone Game stores with Game concessions situated inside larger Sports Direct stores and a reduction in standalone Evans Cycles’ stores.
Premium Lifestyle segment revenue decreased by 14.8 percent to £1,048.2 million as Frasers continued to optimize its store portfolio in House of Fraser and in the businesses acquired from JD Sports, reducing the number of stores from 44 to 27 over the course of the year. Segment profit from trading increased by £20.2 million as a £43.8 million decrease in gross profit, driven by the revenue decline was more than offset by a 230 basis points increase in gross margin from 37.1 percent to 39.4 percent (the result of an improving mix effect with Flannels increasing its share) and a £64.0 million decrease in operating costs as the benefits of integrating and right-sizing the premium businesses was realized.Frasers said, “We continue to develop and invest in our unique luxury proposition, including the recent opening of Flannels in Leeds and Frasers in Sheffield, and right-sizing the premium businesses such as House of Fraser and JD Sports acquisitions. Our long-term ambitions for the luxury business remain unchanged, and we have taken this opportunity to consolidate in order to further strengthen our position.”
Store numbers decreased from 181 doors to 156 doors due to store closures at House of Fraser and the businesses acquired from JD Sports.
This segment includes the results of the Group’s 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, the businesses acquired from JD Sports, as well as the results from the I Saw it First website and the Missguided website until the disposal of the Missguided intellectual property in October 2023.
International Retail revenue increased by 1.3 percent to £1.00 billion, said to be due to growth from the Sports Direct International business and the acquisition of Twinsport, partially offset by Sportmaster, which was integrated in FY24.Segment profit decreased by £13.1 million year-on-year. Gross profit increased by £6.9 million as a result of the revenue growth, while overhead costs increased by £20.0 million due to inflationary pressures and acquisition-related costs.Frasers said, “Working with our global brand partners, FY25 was a breakthrough year for our international growth ambitions for Sports Direct, both deploying our consistently strong cash flow and signing capital-light partnerships. We extended our partnership with MAP Active and now plan 350 new stores, further into Indonesia, plus five new countries: India, the Philippines, Thailand, Vietnam, and Cambodia. In Australia/New Zealand, we increased our investment in Accent Group to 14.57 percent (and to 19.57 percent after year-end), and announced a long-term strategic partnership which includes plans for at least 50 Sports Direct stores in the first six years and a long-term objective of 100. We also signed a new partnership with GMG, targeting 50 new Sports Direct stores in the Gulf/Egypt over the next five years. In Africa, we announced the acquisition of Holdsport in South Africa/Namibia (completed after year-end), and acquired a significant shareholding in Hudson, providing expansion opportunities into Africa/Malta. In addition, we completed the acquisitions of Twinsport in the Netherlands and, after year-end, XXL in Scandinavia.”The number of stores increased from 350 to 373 due to the acquisition of Twinsport and continued growth in Sports Direct Malaysia.
Frasers said, “Following an especially weak period after last year’s Budget, both UK consumer confidence and trading conditions improved into 2025, and recent sales trends have been more encouraging. For FY26, we are mindful of the various macro headwinds and still expect to incur at least £50 million of incremental costs as a result of last year’s Budget, but we are working hard to mitigate those by taking more costs out, focusing on potential efficiencies through the use of AI, realizing further acquisition synergies and sustaining a robust gross margin. We will not compromise on our ambitious plans to build a broader platform for long-term growth and remain fully committed to sustained long-term investment in our successful Elevation Strategy and international expansion. We are currently expecting FY26 APBT in the range of £550 million to £600 million. Longer term, we remain excited by the potential across the Group, especially for Sports Direct after our significant recent step up in international expansion, and for Frasers Plus, and expect these to contribute to our ambitious plans for developing and delivering multi-year, sustainable, profitable growth.”
