A “challenging” luxury market and retreat from gaming have prompted a fall in sales and profits at Mike Ashley’s Frasers.
The group, which is majority owned by the billionaire former Newcastle United owner, said sales fell by 7.4% to £4.7bn and pre-tax profits slid by 24% to £379.5m as it closed some of its House of Fraser department stores and Game video game shops.
Sales in its “premium lifestyle” division, which includes Flannels, House of Fraser and brands such as Pretty Green bought from JD Sports, slumped almost 15% as it said “the luxury market continued to be challenging”, although Frasers said it was “now showing some early signs of improvement”.
Many luxury businesses, including the UK’s Burberry and Mulberry, have struggled amid a slowdown in spending by aspirational shoppers. That group of consumers, who typically treat themselves to an occasional luxury fashion item, have had their budgets constrained by high interest rates, increased household bills and rising prices.
Despite the problems, Frasers said its “long-term ambitions for the luxury business remain unchanged” and it had consolidated its store estate to “further strengthen our position”.
The FTSE 250 listed group said that after “an especially weak period” in the wake of last October’s budget, “UK consumer confidence and trading conditions improved into 2025, and recent sales trends have been more encouraging”. Adjusted profits rose by 2.8% to £560m, it said.
It is expecting underlying profits similar to this year as it said it was working to offset at least £50m of additional costs linked to changes made in the budget, including an increase in employers’ national insurance contributions.
The changes, introduced in April, have already provoked a backlash from business groups against the chancellor, Rachel Reeves, who is widely expected to be forced to raise taxes again in her autumn budget.
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Frasers said it would continue to invest in improving the image of its Sports Direct chain, which had a rise in sales. This improvement, however, was offset by closures of its Game video games outlets and falling sales at its Studio Retail online business, leading to an overall fall of 7.2% in Frasers’ sports division.
The company said it was investing in Sports Direct with a “significant recent step up in international expansion”.
It continued to open outlets for its Flannels luxury streetwear chain, including in Leeds and Sheffield.
Michael Murray, the chief executive of Frasers, said: “We accelerated our international expansion, announcing partnerships in Australia, Asia and [the Middle East and Europe], to further build Sports Direct into a truly worldwide proposition.
“Our relationships with the world’s best global brands, including Nike, Adidas and Hugo Boss, are the strongest they have ever been, and our ambitious growth plans are now strengthening and scaling these partnerships even further.”