In key news on UK stocks, FTSE 100-listed Frasers Group PLC (GB:FRAS) announced that it has boosted its investment in Germany-based fashion company Hugo Boss (DE:BOSS). This brings Frasers Group’s maximum aggregate exposure related to its net-acquired interests in Hugo Boss to around £305 million.
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The company’s investment comes as Hugo Boss shares are under pressure and have declined by 26% year-to-date. FRAS stock traded down by 0.40% as of writing today, while Hugo Boss shares gained 1.7%.
Frasers Group, founded by billionaire Michael Ashley, is a retail company offering a range of clothing, sports, and lifestyle products.
Frasers Group’s Strategic Move
After the recent investment, Frasers Group currently possesses 1.7 million shares of Hugo Boss, representing 2.47% of the overall share capital. Additionally, it holds nearly 9.8 million shares, equating to a 13.92% stake, through the sale of put options.
Today’s investment represents a U-turn for Frasers, which has been reducing its stake in Hugo lately. Diving a little into the history, Frasers acquired a 4.7% stake in Hugo Boss in June 2020, gradually increasing it to 34% by late 2022. However, since then, the company has reduced its stake in Hugo Boss, reaching a low of 8.1% in December 2023.
Considering the significant drop in Hugo’s share price so far in 2024, the latest transaction looks like a bargain for Frasers. Earlier this month, Hugo shares plummeted by around 15% on a single day, following its Q1 results, which highlighted weak demand in China and concerns regarding U.S. consumer sentiment.
Is Frasers Group a Buy?
As per the consensus among analysts on TipRanks, FRAS stock has been assigned a Moderate Buy rating. The consensus rating is based on two Buy recommendations. The Frasers share price target is 1,050p, which is 20.4% above the current level.
