More evidence needed of UK turnaround at Frasers Group, says Shore Capital

(Sharecast News) - Shore Capital has reiterated a 'hold' rating on retail conglomerate Frasers Group, highlighting that while recent acquisitions have driven top-line growth, organic revenues are still declining.

Last week's first-half results from the company revealed a 5% increase in revenues, helped by impressive gains overseas and in the property division, driven by significant M&A activity.

However, the UK Sports Retail arm saw a 5.8% drop in revenues as growth at Sports Direct was offset by drops in Game UK and Studio Retail. Premium Lifestyle revenues were also down 3.7% as growth at the Flannels brand was outweighed by store closures in House of Frasers, Jack Wills and the businesses acquired by JD Sports.

Meanwhile, operating profits were down 18% due to higher depreciation and impairment costs.

"Overall, we see a mixed picture in Frasers Group's recent 1H26A results, with clear signs of the ambitions to expand the International and Property parts of the company and continued growth in the UK Sports Direct brand being largely offset by the ongoing managed decline elsewhere in the business," Shore Capital said.

Shore Capital has nudged down its fair value estimate for the stock from 725p to 700p, saying that while the valuation is undemanding compared with the sector - shares trade at just 6.4 times 2026 calendar-year earnings - more evidence is needed that the UK business is reaching a turning point.

The stock was flat at 643p by 1437 GMT.