Flannels to the fore as Mike Ashley's Frasers Group unveils £100m digital drive

Frasers Group – formerly Sports Direct International – said today it intends to invest in excess of £100 million in its “digital elevation strategy”, as it puts a focus on online development for the year ahead.

The retail group, which is led by Mike Ashley and now runs Sports Direct, House of Fraser, Evans Cycles, Game Digital, Jack Wills, Sofa.com, and other sports and lifestyle brands, said attention would be placed on driving changes at its upmarket Flannels arm.

In today’s preliminary results announced for the full-year trading period to 26 April 2020, the business said it planned to invest to create an “enhanced customer experience”, adding the £100 million would be “integral in supporting the continued growth of our online channels”.

It is part of the group’s wider elevation strategy, which is focused on enhancing its reputation through new look stores, creating "a multi-brand offering in a premium environment", and revitalising the House of Fraser business it acquired in 2018.

Assessing the year ahead, the group said: “With digital transformation now at the forefront, the successful reopening of our stores after the Covid-19 lockdown, and continuing strong web performance, we are confident in achieving between a 10% and 30% improvement in underlying EBITDA.”

Over the last financial year, group revenue increased from £3.7 billion to £3.9 billion, but group profit before tax dropped from £179.2 million to £143.5 million. Group underlying EBITDA grew from £287.8 million to £302.1 million, while its net debt decreased from £378.5 million to £366 million.

David Daly, non-executive chair of the group, said the 12 months will be remembered as “the most challenging year in the history of the company”, with the political uncertainty caused by Brexit negotiations and the Covid-19 coronavirus outbreak towards the end of the fiscal period impacting the bottom line. Frasers also rebranded and acquired a host of new businesses, including Jack Wills and Sofa.com, and closed several stores across its banners.

In today's statement, the retail group said the current strategy involves replacing older stores, which can often result in the closure of two or three stores to be replaced by "one larger new generation store".

Sales at the sports division – the largest part of Frasers Group at 56% of annual revenue – grew by 0.7% to £2.2 billion. When the recent acquisitions are omitted, revenue fell by 14.6%, largely due to the temporary closure of retail stores during the Covid-19 lockdown in March and April.

Premium Lifestyle sales increased by 34.9% to £722 million, with the new-look Flannels stores across the UK a key driver of growth, alongside increased web sales and acquisitions. Excluding recent acquisitions, sales in this division increased by 18.6%.