Frasers Group plc (LON:FRAS) has announced its unaudited half year results for the 26 weeks ended 26 October 2025.
A solid first half: Continued success of the Elevation Strategy with progress on margins, cost savings and international expansion, with tough market conditions continuing into the second half.
Michael Murray, Chief Executive of Frasers Group:
“We’ve made a solid start to FY26 even though market conditions are tough, consumer confidence is very subdued and excess inventory continues to weigh on the industry, leading to increased promotional activity. While we remain cautious into the second half, our focus is unwavering as we confront these challenges head-on, and we are today re-iterating our FY26 APBT guidance of £550m to £600m. We are continuing to invest boldly in our Elevation Strategy-deepening brand partnerships, elevating our product mix, opening new Sports Direct stores internationally, and acquiring strategic properties to strengthen our portfolio. These steps reinforce our ambition and give us real confidence in the substantial long-term opportunities ahead for the Group.”
Headlines
· Continued strategic progress against key priorities:
1. Focus on underlying profitable growth
· Revenue up 5.0% to £2,581.3m, driven by international revenue growth of 42.8%.
· APBT(1) decreased by 2.8% to £290.9m as an £82.3m increase in impairments of tangible and intangible fixed assets and an £11.3m increase in interest costs were largely offset by a £33.8m gain from the disposal of the Coventry Arena and a £41.1m increase in premiums from strategic investments.
· Group and retail gross margin % up 160bps year-on-year, driven by improved product and retail mix in both UK Sports (+140bps improvement) and Premium Lifestyle (+410bps improvement), as the core Sports Direct and Flannels businesses continue to grow as a proportion of group sales.
· Retail profit from trading up 12.2% to £411.4m.
· Green shoots in the luxury market as Flannels returned to sales growth. Premium Lifestyle’s profit from trading up £5.2m (9.2%) to £61.5m.
· Disposed of the non-core, Coventry Arena business for £50m, generating a £33.8m gain on disposal.
· Basic EPS of 76.4p, an increase of 40.5p year-on-year, reflecting fair value gains on derivatives held in relation to strategic investments. Adjusted EPS (1) of 49.8p, a decrease of 1.2p (2.4%) in line with the reduction in APBT (1).
2. Elevation Strategy, best brands and international expansion
· Successfully completed acquisitions of Holdsport in South Africa, XXL in the Nordics and recently opened our first stores with partners in Malta, Australia and the Middle East as we continue to build a platform for global growth.
· Driving even stronger relationships with the biggest global brands, including with strategic brand partners Nike, Adidas and HUGO BOSS.
· Michael Murray appointed to the HUGO BOSS supervisory board in May 2025. Associate accounting for the Group’s holdings in HUGO BOSS and Accent Group added £19.0m to APBT in FY26 H1.
· Further UK property investments at attractive yields to satisfy our occupational demand, with new shopping centres and retail park acquisitions including sites at Greenock and Almondvale. After period end, completed the £217.6m acquisition of Braehead retail park near Glasgow.
· Continue to invest in UK Sport, demonstrated by the opening of our biggest Sports Direct flagship store in Liverpool.
· Invested in The Webster, a leading luxury multi-brand retailer in the US, further strengthening our global brand partnerships.
3. Acquisition integrations and automation synergies
· Delivered £10.3m of underlying net cost-savings and synergy benefits despite significant increases in staff costs driven by increases to National Minimum Wage and Employers’ National Insurance which came into effect in April 2025.
· Efforts under way to realise synergies from recent international acquisitions.
· As noted in our letter to the Unite Union General Secretary Sharon Graham on 3 October 2025, given the significant cost increases imposed on retail by the Labour government, it would be reckless and irresponsible for Unite to implement a strike whilst demanding further above inflation wage increases. We await the Union’s response to our latest communication following a breakdown in talks and urge them not to repeat their previous politically motivated actions against the Group, noting Unite Assistant General Secretary Steve Turner’s quote to us on 4 October 2016 that “It was the agencies we were after…we had to get to you in order to get to the agencies.”
4. Frasers Plus
· Continued progress towards 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 (excluding any third-party partnerships). £154m of retail sales were made on credit in FY26 H1 (FY25 H1: £154m). The business ended FY26 H1 with 1.1m active customers (FY25 H1: 0.4m) and Frasers Plus accounted for 20.0% of UK online sales, compared to 13.7% in FY25 H1. Encouraging improvements seen in store uptake during FY26 H1, and StudioPay exit now complete.
5. Strong balance sheet and cash flow
· The Group’s strategy is underpinned by a strong balance sheet with net assets increasing to £2,394.2m from £1,988.1m at FY25 and net assets per share increasing to £5.32 from £4.41 at FY25.
· Cash inflow from operating activities before working capital movements of £430.8m has enabled the Group to continue to invest in its retail proposition, international acquisitions, Frasers Plus, our property portfolio and strategic partnerships such as HUGO BOSS and Accent Group. Our holding in HUGO BOSS increased to 25.2% in FY26 H1, whilst we also increased our investment in Accent Group to 19.9%.
· Net debt excluding securitisation increased to £1,030.4m (£847.5m at FY25), reflecting capital expenditure, international acquisitions and strategic investments in FY26 H1.
· We secured a new £3.0bn Term Loan and Revolving Credit Facility in July 2025, replacing the previous £1.65bn arrangements, with options to extend the term up to a total of five years and increase the facility by a further £0.5bn. The facility currently stands at £3.1bn.
Outlook
Frasers Group delivered a solid first half, driven by Sports Direct and strengthening margins in our Premium & Luxury division, particularly at Flannels. The consumer environment remains challenging, and although trading has improved compared to last year’s Budget-affected period, it is still weaker than FY24, with excess inventory in the sector continuing to weigh on the wider market.
Despite this backdrop, our ambitions remain high. We are working hard to offset the £50m-plus incremental annual costs from last year’s Budget through disciplined savings, synergies and efficiencies, and continue to expect FY26 APBT of £550m to £600m, including the expected loss from XXL ASA* and the first-time equity accounting of HUGO BOSS and Accent Group.
*Prior guidance, provided on July 17 2025, excluded the results of XXL ASA which was acquired on 27 June 2025.
| FY26 H1 | FY25 H1 (2) | Change | |
| Income statement summary | |||
| UK Sports Retail | £1,328.1m | £1,409.5m | (5.8%) |
| Premium Lifestyle | £444.5m | £461.4m | (3.7%) |
| International Retail | £736.5m | £515.8m | 42.8% |
| Retail revenue | £2,509.1m | £2,386.7m | 5.1% |
| Property | £38.7m | £26.2m | 47.7% |
| Financial Services | £33.5m | £45.7m | (26.7%) |
| Group revenue | £2,581.3m | £2,458.6m | 5.0% |
| Retail gross margin | 46.2% | 44.6% | +160 bps |
| Group gross margin | 47.3% | 45.7% | +160 bps |
| Retail operating costs | (£748.8m) | (£698.2m) | (7.2%) |
| Retail profit from trading | £411.4m | £366.6m | 12.2% |
| Other operating costs | (£25.7m) | (£25.0m) | (2.8%) |
| Gain on disposal of properties | £0.4m | £0.3m | 33.3% |
| Group profit from trading | £447.9m | £401.2m | 11.6% |
| Depreciation & amortisation | (£161.0m) | (£133.6m) | (20.5%) |
| Impairments net of impairment reversals | (£67.8m) | £14.5m | (567.6%) |
| Share-based payments | £11.2m | (£4.7m) | 338.3% |
| Foreign exchange realised | (£10.5m) | (£8.8m) | (19.3%) |
| Operating profit | £219.8m | £268.6m | (18.2%) |
| Reported profit before tax (“PBT”) from continuing operations | £412.1m | £209.0m | 97.2% |
| Result from discontinued operations | £32.4m | £2.5m | |
| Fair value adjustment to derivative financial instruments | (£32.4m) | £10.2m | |
| Fair value gains and loss on disposal of equity derivatives | (£120.5m) | £64.0m | |
| Foreign exchange realised | £10.5m | £8.8m | |
| Share-based payments | (£11.2m) | £4.7m | |
| Adjusted profit before tax (“APBT”) (1) | £290.9m | £299.2m | (2.8%) |
| Reported basic earnings per share (“EPS”) | 76.4p | 35.9p | 112.8% |
| Adjusted basic EPS (1) | 49.8p | 51.0p | (2.4%) |
| Balance Sheet summary | |||
| Property, plant & equipment | £1,229.8m | £897.2m | 37.1% |
| Investment property | £596.1m | £484.0m | 23.2% |
| Long-term financial assets | £477.6m | £1,007.2m | (52.6%) |
| Investments in associated undertakings | £722.8m | £19.0m | 3704.2% |
| Inventories (net of provision) | £1,453.0m | £1,341.9m | 8.3% |
| Net assets | £2,394.2m | £2,101.7m | 13.9% |
| Net assets per share | £5.32 | £4.67 | 13.9% |
| Cashflow & capital allocation | |||
| Cash inflow from operating activities before working capital | £430.8m | £410.4m | 5.0% |
| Net capital expenditure | (£175.1m) | (£204.3m) | 14.3% |
| Purchase of listed investments and associates, net of disposal proceeds | (£193.9m) | (£448.6m) | 56.8% |
Other notes
(1) This is an Alternative Performance Measure, for which the reconciliation to the equivalent GAAP measure is set out in note 3 to the financial information. Adjusted EPS is discussed in note 8.
(2) Restated to reflect the classification of the results of Game Spain and Coventry Arena as discontinued operations and the reclassification of delivery income and costs associated with free-issue gift vouchers from selling, distribution and administrative expenses to revenue. Please refer to note 1 of the financial information for further details.
