Frasers Group PLC stock drops 12% on softer profits forecast and challenging trading conditions

From Investing.com: 2024-12-05 04:48:38

Shares of Frasers Group PLC plummeted over 12% as weaker first-half profits and lowered full-year earnings guidance rattled investors. The company cited consumer confidence and tough trading conditions as reasons for the revised outlook, reducing adjusted pre-tax profit guidance for FY25 to £550-600 million. Analysts flagged the company’s cautious tone and challenging retail environment.

Frasers’ H1 results fell short of expectations, with adjusted PBT at £299 million and revenues at £2.54 billion. While the Premium Lifestyle segment saw a 41% surge in operating profit, other divisions underperformed. UK Sports Retail posted a modest 3% increase, but International Retail and Financial Services reported drops in revenues.

The group incurred a £9 million foreign exchange loss and saw net debt rise to £725 million, higher than expected. Revised FY25 guidance reflects £50 million in incremental costs due to the UK Budget. Despite challenges, Frasers is focused on growth initiatives and remains well-positioned for long-term success.

Frasers Plus loyalty program added 272,000 new customers during H1, accounting for 14% of UK online sales. Management sees this initiative, along with international expansion, as key drivers of future growth. Analysts view Frasers as undervalued, with significant growth potential in the long term.



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