Mike Ashley's Frasers retail group beats the gloom as bet on sports pays off

Sports Direct  expected to account for about 75% of Frasers’ estimated revenue for 2023

Anaylsts reckon parts of the business, such as Sports Direct and Flannels, will shield the company from the full impact of the downturn.

Frasers Group is defying a slump in UK retail shares, in a sign that Mike Ashley’s campaign to turn the firm into the “Selfridges of Sport” is starting to pay off.

Frasers is on track to be the only stock in the Ftse-350 Retail Index to have risen this year, jumping 15% year-to-date while the benchmark has lost a third of its value.

Announced in 2016, Mr Ashley’s plan was to take stores upmarket by offering more space to branded sportswear. The strategy unlocked access to more products, and allowed Frasers to add scale, according to analysts at Numis. 

Underlining its upmarket goals, Fraser’s has bought troubled Savile Row tailor Gieves & Hawkes. 

The Numis analysts see potential for upside to the shares, noting “the underlying cash generation of the group has not been fully appreciated”. 

Mr Ashley, a flamboyant 57-year old billionaire, owns a 69% stake in Frasers. While no longer a director, the self-styled “power drinker” acts in an advisory role after his son-in-law Michael Murray took over as chief executive in May.

The firm’s resilience is striking at a time when most UK retailers are reeling from the country’s worst cost-of-living squeeze since the 1940s. 

The economy’s recession is forecast to see output contract by 2% and cost 500,000 jobs. Frasers boosted its profit outlook in July, sending the shares up 27% on the day. Its outperformance propelled it into the Ftse-100 index of top UK stocks. 

Frasers has become one of the most acquisitive retailers on the high street, snapping up failing businesses. 

Frasers has become one of the most acquisitive retailers on the high street, snapping up failing businesses. 

RBC analysts including Richard Chamberlain say the group’s competitive pricing may give it an edge. 

They also reckon parts of the business, such as Sports Direct and Flannels, will shield the company from the full impact of the downturn. Sports Direct is expected to account for around 75% of Frasers’ estimated revenue for 2023

• Bloomberg