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Alarm bells from House of Fraser as sales shrink by 2% amid challenging conditions

By Holly Williams and Margaret Canning

Published 28/09/2016

House of Fraser is the anchor tenant of Victoria Square
House of Fraser is the anchor tenant of Victoria Square
Victoria Square

Department store chain House of Fraser - the anchor tenant at Belfast's Victoria Square shopping centre - became the latest retailer to warn over high street conditions as it revealed sales woes amid "very challenging" trading.

It comes as the company adds make-up brand Charlotte Tilbury to its Belfast beauty offering in the basement of its store, with a pop-up shop to open this week.

The group reported flat sales over the six months to July 30 and said trading had worsened since then amid low consumer confidence and the disruption of a store revamp plan.

The company posted a 2% drop in sales over the eight weeks to September 24.

Nigel Oddy, chief executive of House of Fraser, said: "We have, like many of our peers, experienced an extremely volatile trading environment since the final quarter of the fiscal year 2016, and we expect this uncertain economic situation to remain for some time."

But the group added that it was "cautiously optimistic" of a bounce-back over the all-important festive quarter, including Black Friday.

The company said it made 85% of its entire year's profits over the Christmas period.

House of Fraser adds to a mounting list of retailers issuing warnings over difficult conditions, with John Lewis and Next also recently cautioning over a shift in consumer spending.

Frank Slevin, executive chairman of House of Fraser, said: "The retail sector is facing significant change in structural dynamics as consumers' shopping habits and delivery expectations continue to evolve."

He also claimed there was scope to develop House of Fraser as a global brand. "Whilst we are still at the very early stages of our international expansion plans, we are pleased to be opening our first Chinese store in Nanjing," Mr Slevin explained.

"The store will clearly demonstrate the unique status that House of Fraser can achieve in the market and will be a standout platform for our concession and brand partners."

House of Fraser reported interim sales of £573.5m, in line with a year earlier, while underlying like-for-like sales edged 0.9% higher, stripping out Virgin Travel concessions.

Underlying earnings dropped sharply to £1.1m from £9.2m a year ago, but the firm said this was largely down to a fall in financial services income.

Gross profits nudged up by £2.5m to £207.2m.

Homeware was the strongest-performing category with sales growth of 4.5%, while menswear and beauty sales increased by 1.8% and 1.9% respectively.

And the company said it was revamping its product range in some stores, with the addition of make-up artist Charlotte Tilbury, fashionwear firms All Saints and Monsoon and handbag brand Mulberry.

It added that it would be opening six concessions from toy giant Hamleys in store during over the next few months.

A Hamleys concession in Belfast's House of Fraser closed down in 2009 a year after Victoria Square opened.

Hamleys also closed down other shops in House of Fraser stores in Edinburgh, Glasgow, Manchester and Birmingham.

House of Fraser is ultimately owned by Chinese company Nanjing Cenbest, following an acquisition two years ago. The company has 59 stores in the UK and Ireland and is to open in a new centre in Rushden Lakes in Northamptonshire next year.

Belfast Telegraph

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