Frasers lifts FY profit outlook despite 'challenging' backdrop

Frasers lifted its full-year profit outlook on Thursday despite a "challenging" backdrop.

The company now expects adjusted pre-tax profit for the full year to be between £450m and £500m, up from previous guidance of £300m to £350m.

For the year to 24 April, Frasers reported adjusted pre-tax profit of £344.8m, versus a loss of £39.9m in the previous year.

Pre-tax profit came in at £366.1m, up from £8.5m a year earlier, driven by the strong reopening of stores after lockdown, new Flannels stores, continued growth in online in the premium lifestyle segment, and continued operating efficiencies.

Meanwhile, revenue increased to £4.75bn from £3.63bn a year earlier.

Frasers said the record results had been achieved despite inflationary pressures and supply chain disruption causing challenges for many businesses in the retail sector.

"As well as the significant increase in general running costs, we are fighting against a fundamentally flawed business rates system which is yet to be addressed," it said. "Linked to these are the cost-of-living pressures facing many of our consumers."

Chief executive Michael Murray said: "I am really proud of the record performance we've announced today. It's clear that our elevation strategy is working and we are building incredible momentum with new store openings, digital capabilities and deeper brand partnerships across all of our divisions. We've got the right strategy, team and determination to keep driving our business from strength to strength."

At 0820 BST, the shares were up 9.1% at 818.50p.

Victoria Scholar, head of investment at Interactive Investor, said: "This is an impressive performance from Frasers Group which has managed to buck the macro negativity and deliver a strong recover in sales post pandemic. Analysts were cautious going into this report with forecasts at the lower end of the company’s own guidance.

"While it acknowledged the challenges from inflation, mentioning a ‘significant increase’ in running costs, the overall trends remain encouraging with investors cheering its upbeat forecast for next year. Shares in Frasers Group have enjoyed some bullish momentum lately despite the volatile equity market backdrop, with today’s gains lifting the stock to test the 2022 highs."