Frasers Group (FRAS) AI Stock Analysis

• Market Cap: £2.29B
• Dividend Yield: N/A
• Average Volume (3M): 538.47K
• Price to Earnings (P/E): 7.8
• Beta (1Y): 1.03
• Revenue Growth: -6.82%
• EPS Growth: -37.46%
• Country: UK
• Employees: 32,000
• Sector: Consumer Cyclical
• Sector Strength: 55
• Industry: Specialty Retail
• EPS (TTM): 0.71
• Shares Outstanding: 450,316,040
• 10 Day Avg. Volume: 406,081
• 30 Day Avg. Volume: 538,465
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): 0.52
• Price to Cash Flow (P/CF): N/A
• P/FCF Ratio: 0.00
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: 1,037.50p
• Price Target Upside: 88.12% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 2

Frasers Group's financial stability and undervaluation support a positive outlook, while international expansions enhance growth potential. However, technical indicators suggest caution, and recent corporate challenges could impact future performance.

Positive Factors

International Growth

The international growth story is progressing strongly with significant developments in SE Asia, MENA, Australia, Southern Europe, and Africa.

Strategic Investments

Frasers has made strategic investments, including a 15%+ investment in Accent for a Sports Direct roll-out in Australia and a 42% investment in Hudson.

UK Sports and Premium Lifestyle Performance

A solid H1, with profit growth in UK Sports and Premium Lifestyle.

Negative Factors

Leadership Concerns

Frasers has highlighted a 'leadership crisis' at boohoo in an Open Letter.

Luxury Market Challenges

The Luxury market has continued to be challenging, and Frasers is seeing little evidence of any green shoots yet.

Trading Headwinds

Trading/opex headwinds following the UK Budget see analysts lower FY25/FY26 aPBT forecasts by -5%/-10%.

Frasers Group Business Overview & Revenue Model

Company Description

Frasers Group plc, together with its subsidiaries, retails sports and leisure clothing, footwear, equipment, and apparel through department stores, shops, and online in the United Kingdom and internationally. The company operates through five segments: UK Sports Retail, Premium Lifestyle, European Retail, Rest of World Retail, and Wholesale & Licensing. It is also involved in the wholesale distribution and sale of sports and leisure clothing, footwear, equipment, and apparel; and licensing activities. The company offers its products under its own and third party brands, which include Slazenger, Everlast, Lonsdale, Karrimor, 18montrose, Evans Cycles, Flannels, Frasers, Game, House of Fraser, Jack Wills, Sofa.com, Sports Direct, USC, Flannels, Cruise, van mildert, House of Fraser, Sofa.com, and Jack Wills. As of April 25, 2021, it operated 806 sports retail stores in the United Kingdom; 486 sports retail stores in Europe; 33 stores in Malaysia; 44 stores in the United States; and 179 Premium Lifestyle stores. The company was formerly known as Sports Direct International plc and changed its name to Frasers Group plc in December 2019. Frasers Group plc was founded in 1982 and is headquartered in Shirebrook, the United Kingdom. Frasers Group plc operates as a subsidiary of MASH Holdings Limited.

How the Company Makes Money

Frasers Group generates revenue primarily through its retail operations, which involve the sale of sports equipment, apparel, and fashion products across its numerous store formats and online platforms. The company's revenue streams are diversified across several brands and geographic markets, providing a mix of price points and customer demographics. In addition to direct retail sales, Frasers Group also earns income through brand licensing agreements, which allow other businesses to produce and sell products under its owned brand names, thereby earning royalties. Furthermore, the company benefits from strategic acquisitions of distressed retail brands, enhancing its portfolio and market reach. Partnerships with international suppliers and exclusive product lines contribute significantly to its earnings by ensuring a competitive product offering.

Frasers Group Financial Statement Overview

Summary

Frasers Group demonstrates financial stability and operational efficiency, with strong cash flow generation and a solid equity base. While revenue growth has stalled, the company maintains stable profit margins and a manageable debt level. Continued focus on revenue growth and profit margins will be crucial for future performance.

Income Statement

Frasers Group's income statement reveals a mixed performance. The gross profit margin remains stable at 43.3%, indicating efficient cost management. However, the net profit margin has decreased to 6.9% from the previous year due to a drop in net income. Revenue growth is negative, declining by 0.34% compared to last year, which may be a concern. Despite these challenges, the company has improved its EBIT margin to 9.4%, suggesting better operational efficiency.

Balance Sheet

The balance sheet shows a robust position with an equity ratio of 41.4%, reflecting a strong equity base. The debt-to-equity ratio stands at 0.79, indicating a moderate level of leverage that is manageable. Return on equity is 20.6%, demonstrating effective utilization of shareholders' equity to generate profits. Overall, the balance sheet suggests financial stability with adequate equity and manageable debt levels.

Cash Flow

Cash flow analysis highlights an impressive operating cash flow to net income ratio of 1.79, indicating strong cash generation relative to net income. The free cash flow growth rate is 823.3%, driven by a significant increase in free cash flow, which reflects improved cash management. The free cash flow to net income ratio is 1.09, showcasing efficient conversion of profits into cash. These metrics point to a solid cash flow position with strong liquidity.

Breakdown
Jun 2024	Jun 2023	Jun 2022	Jun 2021	Jun 2020
Income Statement		Total Revenue
5.54B	5.56B	4.69B	3.51B	3.96B
	Gross Profit
2.40B	2.37B	2.04B	1.48B	1.37B
	EBIT
520.60M	339.70M	450.80M	200.90M	165.70M
	EBITDA
883.10M	976.20M	609.70M	337.30M	478.00M
	Net Income Common Stockholders
380.80M	491.70M	249.80M	-83.00M	93.80M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
358.60M	332.90M	336.80M	457.00M	534.00M
	Total Assets
4.45B	4.29B	4.14B	3.79B	3.87B
	Total Debt
1.45B	1.43B	1.45B	1.43B	1.52B
	Net Debt
1.09B	1.10B	1.11B	971.60M	990.10M
	Total Liabilities
2.58B	2.63B	2.83B	2.57B	2.59B
	Stockholders Equity
1.84B	1.62B	1.29B	1.19B	1.27B
Cash Flow		Free Cash Flow
415.00M	44.90M	159.20M	276.50M	45.20M
	Operating Cash Flow
682.20M	514.30M	482.40M	496.90M	368.70M
	Investing Cash Flow
-387.40M	-201.40M	-123.50M	-289.90M	-203.70M
	Financing Cash Flow
-297.60M	-320.40M	-479.20M	-278.70M	-84.00M

Frasers Group Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 551.50
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For GB:FRAS, the sentiment is Negative. The current price of 551.5 is below the 20-day moving average (MA) of 617.40, below the 50-day MA of 623.28, and below the 200-day MA of 732.85, indicating a bearish trend. The MACD of 0.91 indicates Positive momentum. The RSI at 39.12 is Neutral, neither overbought nor oversold. The STOCH value of 17.99 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for GB:FRAS.

Frasers Group Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
NXT	77 Outperform	£12.80B	17.83	46.76%	1.96%	12.83%	15.54%
JD	77 Outperform	£3.59B	11.12	14.67%	1.47%	2.85%	61.98%
MKS	72 Outperform	£7.40B	14.50	17.19%	0.81%	6.87%	22.36%
FRAS	66 Neutral	£2.29B	7.81	16.46%	―	-6.82%	-37.46%
Sector *	59 Neutral	$11.74B	10.16	-1.06%	4.15%	1.27%	-16.61%
DEBS	48 Neutral	£265.17M	―	-96.36%	―	-16.32%	-202.39%
ASC	42 Neutral	£297.80M	―	-48.80%	―	-18.15%	-30.29%

Frasers Group Corporate Events

Frasers Group Expands Stake in Hugo Boss with Strategic Investment

Frasers Group has increased its investment in Hugo Boss by acquiring additional shares and selling put options, potentially raising its stake to 23.7% of Hugo Boss’ total share capital. This strategic move is part of Frasers Group’s broader investment strategy to create value for shareholders and strengthen its position in the fashion industry, with CEO Michael Murray nominated for Hugo Boss’ Supervisory Board.

Frasers Group Updates on Voting Rights and Share Capital

Frasers Group PLC has announced an update on its total voting rights and share capital, reporting 450,316,035 voting rights after accounting for treasury shares. This information is crucial for shareholders to determine their interests in the company under the FCA’s Disclosure Guidance and Transparency Rules.

Frasers Group Expands Sports Direct into Southeast Asia and India

Frasers Group has announced an expansion of its partnership with MAP Active to introduce Sports Direct stores in five new markets across Southeast Asia and India. This move is part of a long-term growth strategy to open over 350 stores, leveraging MAP Active’s local expertise and Frasers Group’s brand strength to establish Sports Direct as a leading sports retailer in the region.

Frasers Group Announces Updated Voting Rights and Capital Structure

Frasers Group PLC has announced the total number of voting rights and capital in the company as of the end of February 2025. The company has issued 640,602,369 ordinary shares, with 190,286,334 held as treasury shares, resulting in 450,316,035 total voting rights. This information is crucial for shareholders to determine their interests in the company under the FCA’s Disclosure Guidance and Transparency Rules.

Frasers Group Partners with GMG for Gulf and Egypt Expansion

Frasers Group has announced a strategic partnership with GMG to expand its retail presence in the Gulf region and Egypt, with plans to open 50 new Sports Direct stores over the next five years. This partnership leverages GMG’s extensive market knowledge and distribution capabilities, aiming to strengthen Frasers’ position in the sports retail industry and enhance its growth potential in these regions.

Frasers Group Halts Acquisition Plan for XXL ASA

Frasers Group PLC announced that it will not proceed with its planned voluntary offer for XXL ASA shares it does not own, citing the inability to meet the condition of securing acceptance from a sufficient number of shareholders. This decision impacts Frasers’ expansion strategy, potentially altering its market position and influencing stakeholder expectations regarding future acquisition activities.

Frasers Group Updates Total Voting Rights for January 2025

Frasers Group PLC has announced an update on its total voting rights as required by the FCA’s Disclosure Guidance and Transparency Rules. As of the end of January 2025, the company has 450,316,035 total voting rights, which shareholders can use to determine if they need to notify any changes in their interest in the company. This update is crucial for ensuring transparency and compliance with regulatory requirements.

Frasers Group Raises Concerns in Open Letter to boohoo Shareholders

Frasers Group has issued an open letter to the shareholders of boohoo group plc, highlighting concerns about certain issues related to Mr. Umar Kamani. This development follows a recent general meeting of boohoo’s shareholders, the outcomes of which Frasers has acknowledged, indicating potential impacts on shareholder relations and corporate governance within the industry.