Frasers Group PLC (LSE:FRAS) has seen its buying spree drive first half revenue growth, according to analysts at Shore Capital, who have maintained a ‘buy’ rating on the stock and set a target price of 895p.
Mike Ashley-controlled Frasers on Thursday said it remains confident of delivering full-year pre-tax profits of between £450mln to £500mln as it posted bumper interim profits bucking the weak retail environment.
The FTSE 100-listed retailer saw pre-tax profits rise by 38.8% to £267.1mln in its half-year to 23 October 2022, while group revenues advanced 12.7% to £2,638mln.
“The performance was mainly driven by the Premium fascia and the continually improving product choice in its core UK business,” the ShoreCap analysts said in a note to clients.
Another potential acquisition target may have presented itself today. In The Style, the digital womenswear fashion brand, has confirmed it is mulling a sale following a strategic review.
Frasers has shown its willingness to buy seemingly ‘failing’ brands, most recently snapping up bespoke London tailor Gieves & Hawkes, as it looks to diversify its offering.
The City broker's analysts noted that Frasers is already a leader in sporting areas and is working towards becoming increasingly relevant in other, faster-growing, areas of the consumer space, in particular the premium and luxury space.
As a result of “supportive industry tailwinds” and demand for luxury items, the ShoreCap analysts expect Frasers to continue its recovery following the Covid pandemic.
Indeed, Frasers has been one of the better-performing stocks in the year to date against sector comparatives.
According to data, the retail sub-sector on the London Stock Exchange is down 32% in the year so far. By comparison, Frasers is up 3.5, while FTSE 100 rival Next is down 27% in the year so far, and JD Sports has nosedived 42% during 2022.