Stock of the Week: Frasers Group

Sports retail arm of the Mike Ashley empire will be boosted by this summer's sporting events, but fears over more lockdowns remain

James Gard 2 July, 2021 | 11:31AM
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With Wimbledon now in full swing, we asked our Twitter followers to choose a stock of the week with a tennis theme. So far it’s “deuce” between Japan’s Sumitomo Rubber Industries (5110), maker of Dunlop rackets and balls, and the UK’s Frasers Group (FRAS), which owns the Slazenger brand. In a last minute tiebreak between the two, Frasers has come out on top.

Frasers Group is better known for owning sports Sports Direct, which has a presence on many British high streets, and the group owns a wide range of sporting brands including Lonsdale, Everlast and Karrimor. Frasers Group’s wider retail empire goes beyond sport. After a series of acquisitions the group owns department store House of Fraser, which was bought out of administration in late 2019,, French Connection, Game and Evans Cycles. Founder and current chief executive Mike Ashley still controls more than 60% of the company. Shares floated at 300p in 2007 and surged to over 900p in early 2014. Concerns over corporate governance and worker welfare, as well as the impact of Covid-19 on retail, have dented the share price since the 2014 peak. Still, at around 600p, the shares are now above their pre-pandemic peak.

Those who follow short-term technical trends may have noticed that the shares have been on an upward trajectory as the England football team has progressed through the Euro 2020 tournament. Even if football does not “come home”, high-margin replica football shirts will be in demand as the new Premiership season starts. A number of other sporting events, also delayed from last year, such as the Olympics and Wimbledon, will also boost demand in the short term. While the UK Prime Minister said this week that the end of lockdown is “irreversible”, clearly the rise in coronavirus cases and new variants will be of great concern to retailers planning their autumn and winter schedules.

Frasers Group share price

While Britain is focused on July 19 as the route out of lockdown, “normal life” is still very much an aspiration for retailers with a heavy high-street presence like Frasers Group. While non-essential retailers have been open since April 12 in England, anyone visiting a high street since the last lockdown ended can see that all is not well. Plans to close all of its UK and Ireland outlets by US retailer Gap (GPS), announced this week, are just the latest evidence of this malaise.

In February, Frasers Group warned of the effects on retail of “the length of this current lockdown, potential systemic changes to consumer behaviour and the risk of further restrictions in the future”. At the time, the company said it expected to write down the value of its property portfolio by £100 million, but two months later this estimate had doubled to more than £200 million. Analysts at Hargreaves Lansdown see a number of trends contributing to Frasers’ pessimism about this year. One is the change in consumer behaviour since the pandemic, a trend we have touched on during out thematic investing week. “Although it has a significant online presence, to offset some of the lost sales, it also has a large footprint of stores in high streets which have fallen out of favour with shoppers, compared to retail parks, even when restrictions have eased,” says senior investment and markets analyst Susannah Streeter. Away from sports, the group, which owns fashion brands too, will have been impacted by the decline in “occasion wear” such as clothes for weddings, social events and visits to the office.

The company’s last set of results covered the very early period of the 2020 lockdown, with the financial year ending April 26, 2020. At the time the group reported net profits of £101 million, down from £116 million in the previous year. The group decided not to pay a dividend that year, but it has been buying back shares. The next results are on August 2020, where the full impact of the pandemic on the retail business will become clear.

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James Gard

James Gard  is senior editor for


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