Dan Coatsworth, head of markets at AJ Bell, said: “International sales have come to Frasers’ rescue, with rapid growth helping to offset a troubling pullback in UK operations.
“This result means that Frasers’ recent geographical expansion efforts were perfectly timed.
“The key question to ask is whether branching out was down to bold growth ambitions or recognition that its homeland is no longer a slam dunk for earnings.
“Frasers has blamed excess inventory in the retail sector for weighing on the wider market. Too much stock means retailers must slash prices to shift units.
“If someone is selling goods cheaply, competitors tend to cut price-tags rather than risk standing firm at full price and the result being that no-one buys their goods.
“Frasers’ Sports Direct division is no stranger to a pile ‘em high, sell ‘em cheap strategy, but the parent has increasingly been focused on earnings quality rather than quantity.
“Encouragingly, Frasers’ upmarket operations enjoyed a strong bump in gross margins from 38.6 per cent to 42.7 per cent as Flannels becomes a bigger contributor to the premium lifestyle division.
“Investors aren’t quite sure how to react to a complicated set of results, given so many moving parts involving retail, property and financial services.
“One might have thought the weaker UK showing would have troubled the market, but for now investors seem to be giving the company the benefit of the doubt.”
Contact details are available to account holders.
Create a free account to get in touch with this expert.