Frasers' full-year revenue rose 15.8% to £5.6bn, largely due to acquisitions. Ignoring the impact of acquisitions, disposals and exchange rates, the group's revenue increased by 1.3%.
Underlying profit before tax rose 40.7% to £478.1m, driven mainly by growth in the UK Sports Retail division.
Net debt improved from £491.1m to £416.8m. Free cash flow fell from £329.6m to £87.1m largely due to increased spending on property assets.
CEO, Michael Murray, said that trading in "the new financial year has started well, especially at Sports Direct". Full-year underlying pre-tax profits are expected to be in the range of £500m-550m.
The board has again decided not to pay a final dividend.
The shares rose 2.4% following the announcement.
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Our view
Frasers' growth this year is largely down to its recent acquisitions of other brands. These bumper revenues made their way down to the bottom line meaning underlying pre-tax profits landed in the middle of its £450m-£500m full-year guidance.
The group's so-called "elevation strategy" calls for new freehold flagship stores, displaying products in a more flattering, and digitally integrated, environment. That should allow the group to improve its relationship with key brands like Nike and Adidas, securing the newest products.
Early signs from a couple of recently built flagship stores look promising, but as yet they don't contribute enough to group performance to move the dial. New flagship stores have been announced for Leeds and Manchester, but lots more still need upgrading if the format is going to contribute more meaningfully.
On top of the execution risk that comes with a move of this magnitude, Frasers is up against a very challenging backdrop. The structural decline in bricks-and-mortar shopping, is a force to be reckoned with.
And the decision to take on two shopping centres last year, as well as previous high-street names including House of Fraser, GAME and Jack Wills only makes Frasers' exposure to the struggling sector more acute. Department stores in particular are facing the brunt of the issues - particularly unsavoury lease agreements and falling footfall.
All-said, the group's relying on a resurgence in high street activity for its multi-brand high-street powerhouse plan to pay off. The addition of Missguided and I Saw it First shows intent on the digital side. It's hoped that these acquisitions will expand the group's online presence and we think it offers some protection against decreased footfall to physical stores too.
The cost-of-living crisis is another concern. Frasers has some protection in the form of low-cost Sports Direct and it's also pushing into Luxury with its FLANNELS and Gieves & Hawkes acquisitions - pockets of retail that should be relatively insulated. However, we're mindful that we haven't see the full impact on consumer sentiment and with inflation remaining sticky, it's a key risk to the group's new profit forecasts.
Given the risks surrounding brick-and-mortar stores, markets aren't valuing Frasers' earnings for the next twelve months as highly as they were last year. The group now trades well below its longer-term price-to-earnings ratio, which looks more appropriate.
Frasers key facts
All ratios are sourced from Refinitiv. Please remember yields are variable and not a reliable indicator of future income. Keep in mind key figures shouldn't be looked at on their own - it's important to understand the big picture.
This article is original Hargreaves Lansdown content, published by Hargreaves Lansdown. It was correct as at the date of publication, and our views may have changed since then. Unless otherwise stated estimates, including prospective yields, are a consensus of analyst forecasts provided by Refinitiv. These estimates are not a reliable indicator of future performance. Yields are variable and not guaranteed. Investments rise and fall in value so investors could make a loss.
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